Ensuring a future for steel in Europe Published on: 11/06/2013, Last update: 14/06/2013
The steel industry has a promising future in Europe. By continuing to lead in innovative products, its traditional strength, it can achieve a globally competitive edge. With today’s blueprint for the revival of the steel sector, we send a clear signal to the industry that it is a strategically important sector for Europe and a motor for growth. The EU needs its real economy more than ever to underpin the economic recovery and we aim for industry to deliver 20% of GDP by 2020. This is the start of a process; I am committed to monitoring the situation carefully so we can adapt our efforts as needed. Within a year, we will look at whether the actions proposed are having the effect we aim for
The European Commission today put forward an action plan for the European Steel Industry to help this sector confront today’s challenges and lay the foundations for future competitiveness by fostering innovation, creating growth and jobs. For the first time since the Davignon Plan of 1977, the Commission is proposing an Action Plan for steel.
The Commission proposes to support demand for EU-produced steel both at home and abroad, by acting to ensure EU steel producers have access to third country markets through fair trade practices. The European Commission is also committed to cutting costs for the industry, including those arising from EU regulation. Innovation, energy efficiency and sustainable production processes are vital for the next generation steel products essential for other key European industries. The Action Plan also foresees targeted measures to support employment in the sector and accompany the restructuring to ensure that highly skilled labour is retained in Europe (MEMO/13/523).
European Commission Vice President Antonio Tajani, Commissioner for Industry and Entrepreneurship, said: "The steel industry has a promising future in Europe. By continuing to lead in innovative products, its traditional strength, it can achieve a globally competitive edge. With today’s blueprint for the revival of the steel sector, we send a clear signal to the industry that it is a strategically important sector for Europe and a motor for growth. The EU needs its real economy more than ever to underpin the economic recovery and we aim for industry to deliver 20% of GDP by 2020. This is the start of a process; I am committed to monitoring the situation carefully so we can adapt our efforts as needed. Within a year, we will look at whether the actions proposed are having the effect we aim for."
Important challenges for the steel industry
The European steel industry finds itself hit by the simultaneous effects of low demand and worldwide overcapacity whilst at the same time being confronted with high energy prices and investment needs to adjust to the green economy by producing innovative products in a sustainable manner.
… but global steel demand will increase
Steel demand in Europe is currently 27% below the pre-crisis level. Employment in the sector fell by 10% from 2007 to 2011. Despite this, the EU is still the second largest producer of steel in the world, with an output of over 177 million tonnes of steel a year, accounting for 11% of the global output and employing over 360 000 people.
According to the OECD, global steel demand is expected to increase to 2,3 billion tonnes by 2025, mainly from the construction, transport and mechanical engineering sectors, in particular in emerging economies. It is vital that the EU steel industry is fit to take full advantage of this competitive market.
The current situation requires a new political strategy for the steel sector. Therefore the Commission is:
- Ensuring the right regulatory framework is put in place: Measures include assessing by end 2013 the overall regulatory burden on the steel industry from different policies and its impact on competitiveness.
- Addressing skills needs and easing restructuring: Promoting skills development measures and measures targeting youth employment in the sector to boost the sector's competitiveness as well as exploring the possibility to use relevant EU funds to help workers to find alternative employment in cases of production site closures. The European Social Fund and the European Globalisation Adjustment Fund will to continue to contribute to this effort. All EU funds will follow the principle of regional smart specialisation, taking into account the durability of the investment in creating and maintaining jobs in a particular region.
- Boosting demand for Steel: Measures include implementing targeted action to stimulate demand in the car and sustainable construction sectors.
- Improving access to foreign markets and ensuring a level playing field so as to support EU steel exports, fight unfair practices and ensure access to vital raw materials. Scrap markets will be monitored to enhance security of supply for EU steelmakers using scrap as a raw material.
- Ensuring affordable energy costs: The completion of the internal energy market and diversification of supply as well as increased energy efficiency will contribute to lower costs. The Commission is willing to provide guidance on long term electricity contracts between suppliers and customers to increase the predictability of such costs. In the short term reduction of energy costs for Energy Intensive Industry will depend on Member States. The Commission is committed to work towards this goal
- Climate policy: The EU’s 2030 climate policy framework will be key in ensuring the competitiveness of the industry as will be the negotiations for a binding international agreement on climate change. Manufacturing of certain forged ferrous products will be added to the carbon leakage list and MS are invited to earmark revenue from the ETS auction to R&D projects for Energy Intensive Industry
- Boosting innovation: Promotion of environmentally friendly technologies through the development of new types of steel, and stimulation of innovative R&D, particularly for the very expensive pilot and demonstration phases. For 2014-2020, research and innovation is to be funded mainly through the Horizon 2020 programme, which places a strong emphasis on industrial leadership in innovation. The steel sector also benefits from the European Innovation Partnership for Raw materials and for 280 million over the same programming period from the Research Fund for Coal and Steel
The Commission proposes to formally create a High-Level Group, which will oversee the implementation of the plan. The Commission will take stock of the progress made in 12 months.
With a workforce of 360,000 people, turnover of around €170 bn and a presence in the manufacturing value chain of many downstream sectors, the steel industry has a strategic place in the economy.
Steel is closely linked to many other downstream industrial sectors such as automotive, construction, electronics, mechanical and electrical engineering. It has a very significant cross-border dimension: within the EU, 500 production sites are spread around 23 Member States, making it a truly European industry both historically and today. Steel was at the birth of the European project with the European Coal and Steel Community.
Europe needs its basic industries, to help other industries with the re-industrialization process. Materials like steel, chemicals, glass and cement are essential elements of the industrial value chain for greening the economy. Steel is 100% recyclable and is the most basic material in the manufacturing value chain of a product.