The meeting accepted the principle that it is wrong to apply general measures to any machine tool independently on the effectiveness.

CECIMO, the European Association of the Machine Tool industry has developed a new concept aimed at making environmental improvements in the industry, which they presented yesterday to the EuP Consultation Forum.

The innovative concept was very much appreciated by the participants. To quote one of the participants: “The sector did a lot of analysis, there is a clear concept and process which is even already developed in some detail. This looks very promising.” Filip Geerts, Director General of CECIMO, says: “We had to come up with a creative solution as we are the first real Business to Business sector with custom-made industrial products that wants to show its environmental improvements are in line with the EuP Directive. We are very pleased that the Commission even declared that our model could be the basis for many other complex product groups.”
 
The sector is convinced that the individual application of measures, taken from a list of agreed and controlled options ensures the possibility of realising the biggest potential per machine; the implementation will be guided by an informed decision procedure.

The intended goal of the Self Regulatory Initiative (SRI) is to increase the ecological performance of each machine tool while maintaining the freedom of innovation, minimizing administrative burdens and clear positioning of advanced manufacturing against copycat. This is to be accomplished by proposing improvements regarding environmental impacts. These improvements originate from machine tools in the future beyond the level of business as usual (BAU). The gained relative improvement and the total absolute improvement, in for example energy consumption, will be monitored by the open CECIMO task force and reported showing that the industry sector reaches the targets set jointly.

The method is new due to the complexity of the individual machine tool types.
This product group is very diverse and in-homogenously reflected by a multitude of individual machines
The basis of the method is a modular view of the machine tool. Theoretically the machine tool is split into its modules, i.e. components with specific and defined functions.

The method must be conducted under an SRI as a continuous update of the list of improvement measures is necessary.
The list of improvement potentials describes the measures which can be implemented into a machine tool for better environmental performance. The list is a matter of continuous extension and adaptation in accordance to innovations and technical developments. In order to ensure sustainability, the list must be updated regularly. This reflects the fact that developments become state of the art technologies. This leads to a continuous setup and adaptation of the BAU reference.

The Chairman of the meeting concluded that the concept of CECIMO is very interesting and does go to the roots of eco-design. He added that a lot of work still has to be done and this by preference under standardisation activities. The Commission asks CECIMO to work closely together with the contractor who will be given the task to do the preparatory study on Machine Tools. That contractor must take into account the proposals of CECIMO.

Trade of machine tools between Europe and China is very important. European exports to China amounted to 1.8 billion Euros in 2008. CECIMO calls on the authorities to create effective legal environment and incentives to help increase the trade of machine tools.

China is the main export country for European machine tool producers. 26% of the total European machine tool exports were directed to China in the first six months of 2009. Despite the crisis, European exports to China grew by almost 25% in comparison with the same period in 2008. China has been the number one market for machine tool consumption for seven consecutive years and accounts for one third of the global consumption of machine tools in 2009.

The value of European machine tool exports to China is 10 times bigger than the corresponding value of exports from China to Europe. The machine tool industry is therefore one of the very few industries in Europe which still maintains a positive trade balance with China. European machine tool producers export successfully to China thanks to their leading technology, know-how and innovative products. CECIMO believes that the European technological leadership in machine tools can only be sustained through continuous and increased investments in research and development. CECIMO supports all European research initiatives and projects aimed at finding tomorrow’s cutting-edge manufacturing technologies.

The legal environment in which the machine tool industry has to conduct business worldwide must be improved by harmonizing standards and by removing trade barriers:

CECIMO asks for more harmonization/correspondence between the Chinese (CHN) and international (EN/ISO) standards, so that international standards are recognised by the Chinese local and national test centres. For example, CECIMO pledges for global energy efficiency requirements.

CECIMO is also opposed to any “buy local” act that favors locally manufactured goods over imports. Therefore, CECIMO is disappointed that China has recently changed the regulation on the free import licenses for machine tools, which are now restricted to the machine tools not available locally. The Chinese manufacturing industry must be free to choose European machine tools on a level playing field, even when the technology is available on the Chinese market.

Together with 11 other major European sector associations in mechanical engineering, CECIMO has recently sent a letter to Mr. José Manuel Barroso, President of the European Commission, to support the current negotiations with South Korea for the finalisation of the bilateral free trade agreement.

CECIMO is in principle in favour of the removal of any market access restriction given the high exporting nature of the European machine tool industry.

In 2008, CECIMO exported 280 million euros worth of machine tools to South Korea. The total elimination of barriers is expected to further foster these exports.

As more than 80% of the machine tool manufacturers are small and medium sized companies, it is also important to reduce as much administrative burden as possible. Therefore, CECIMO requests some uniform rules of origin for all free trade agreement for more clarity, and to adjust them to already existing EU standard rules.

The duty drawbacks requested by South Korea are not considered as a major issue for the machine tool industry. We think that this agreement is on the contrary a good opportunity for the European manufacturing technologies sector to strengthen its competitiveness towards Japan, China and the US on the South Korean market.

The Committee 133 will meet on 10th Kuly to discuss the EU-South Korea compromise agreement with member states. The outcome of this meeting will give an indication on the different points of view of the European Member States and on a possible signature in the short term or not.

The CECIMO 2009 Spring General Assembly, which was held in San Sebastian (Spain) on 9th June 2009, was the occasion for the European machine tool builders and their representative associations from fifteen countries to analyse in-depth the impact of the economic crisis on their industry.

The European Machine Tool sector has been sitting in the heart of the crisis since the last quarter of 2008.  The sector is strongly dependant on industrial production and capital investments, the first quarter of 2009 has experienced a drop in new orders of machine tools by more than 53% over the same period last year.  Global end-user markets suffered weak demand and in consequence reduced investments in machine tools as one of the first cost cutting measures. Mr. Javier Eguren, President of CECIMO, states: “the automotive sector, representing approximately 30% of the revenues of the machine tool industry, currently refrains from investing.”

As a result of the global weak demand in end user markets, European consumption of machine tools is expected to drop between 30% - 40 % in Europe in 2009. Economic forecasters predict that Asian, and particularly Chinese and Indian consumption will be less affected than in Europe or in the US. In order to cope with the downturn, European machine tool builders reduced their inventory levels and focused on labour flexibility with reduced working times to retain strategic skills. Mr. Filip Geerts, Director General of CECIMO, highlights: “The combination of dropping orders in the first quarter of 2009 along with reduced inventory levels will directly impact the overall production of new machine tools in 2009”.

Despite the current difficult economic environment, this is not an issue of competitiveness because CECIMO is still leading the global market for the production of machine tools with a 44% market share. However, this leadership may be put in question in the longer run should Europe not benefit from stimulus plans like our Asian and American competitors.

For instance, with 32% of the global consumption of machine tools in 2009 (more than 12 billion €) from which 15% comes from imports from CECIMO countries, what happens next to the Chinese market is crucial to the European machine tool industry.

Mr. Frank Brinken, Chairman of the Economic Committee notes: “a positive sign is the slowing decline in the manufacturing business confidence indexes in most countries since April 2009. Investments into renewable energies and energy efficient manufacturing technologies might be another driver”. CECIMO also expects some good business opportunities for the European machine tool manufacturers during the EMO Trade Fair, which will take place in Milan (Italy) from 5 to 10 October 2009.

However, most industrial economists are sceptical about a sustainable recovery before 2010, and such a prolonged downturn presents a challenge to keep our skilled workforce in Europe.  

CECIMO has already strongly voiced towards EU Officials in the recent months that how machine tools are a key element of a sustainable manufacturing activity and work place competitiveness in Europe. Governments must be aware that without machine tools, the manufacturing sector will die quickly and irreversibly.

CECIMO firmly believes that the current economic downturn is also a good opportunity to develop new business models and technologies in the machine tools industry, leading to new key competitive advantages. This will further strengthen the undisputed European leadership in the global production of machine tools.

New Business Concepts for the European Machine Tool Industry

The effects of the global financial crisis on the European machine tool sector have started to be felt significantly from the first quarter of 2009. The sharp fall in orders risks hindering the industrial output and European machine tool builders (MTB) are preparing for a difficult year whilst striving to keep their production going and to maintain their competitiveness on the global markets. The immediate expectations of the machine tool industry of European decision-makers are the adoption of measures to help reduce the burden of the financial crisis on the manufacturing industry by avoiding over-regulation which would bring extra implementation costs on manufacturers and by providing sufficient public support (such as public funds for R&D) at the bottom of the industrial production pyramid, namely the enabling industries which uphold the bulk of the European manufacturing activity.

In the meanwhile, the industry recognizes its responsibility and ability to take the necessary steps forward to respond to the current challenges by putting innovative solutions into practice. Indeed, significant endeavors to this end had already been undertaken prior to the economic crisis, as in the case of the EU-funded project: NEXT Production Systems. As a major initiative in the area of production systems, NEXT brings together the research community, manufacturers, end users and financial actors from all over Europe, with the objective of identifying and developing technology-based machine concepts and new business concepts (NBC) for the machine tool industry. NBC aim at helping MTB increase their sales and profitability by adapting their business relationships with customers to the changing economic and technological environment and needs.

In assembling the expertise and knowledge of the research community and the industry on a single platform during its 4 year life-cycle NEXT has introduced new models of business relationships between the MTB and their customers. Such models acknowledge a shift from the mere supply of machines to an extended business relationship. Accordingly, based on an agreed and accepted model of action, parties cooperate in product & production planning, financing questions and R&D etc and strive to produce a business relationship which best fits the customers’ needs and thus maximizes the competitive advantage of the European machine tool suppliers through differentiation from their non-European competitors. In the new business concepts (NBC), new financing models (i.e. leasing offered by manufacturers) and payment models (i.e. pay per part, pay per availability etc) offer alternative solutions to enliven the dormant markets in the absence of sufficient liquidity. Furthermore, in promoting the sharing of information and risk and the management of the whole machine production life-cycle in a joint-venture model, NBC’s aim is to improve the connection between the end user and the machine tool manufacturer. Hence, NBC advocate the idea that adoption of increased customized solutions through the entire life-cycle of the machine tools will lead to a win-win situation for the supplier and customer.

Today’s economic downturn, a seemingly impossible eventuality in 2005 when the project was launched, highlights the significance of NBC and their pre-emptive and tailored approach. Undoubtedly, there is no single miraculous remedy which would help machine tool manufacturers cope with the economic plunge. However, CECIMO strongly believes in the potential of NBC’s business-wise solutions to guide the manufacturing industry through the stormy waters.

CECIMO in NEXT

CECIMO, representative of the European machine tools industry, plays a strategic role in the NEXT project and constitutes the interface between the industry and the research community by helping to obtain market-oriented results out of this ambitious R&D project. CECIMO is essentially involved in the dissemination track and has thus far communicated the preliminary results of the project to the industry via various activities such as workshops, conferences and exhibitions. NEXT will be completed by the end of September 2009 and the first presentation of the final results will be made during a conference at EMO, the biggest machine tool exhibition in Europe, which will take place this year in Milan between 5-10 October.

CECIMO represents the European industrial sector which designs and manufactures the machine tools which produce component parts, principally of metals, which are then assembled to become either a final consumer product, used daily by all citizens (e.g. a car or an electro domestic appliance) or capital goods (e.g. a wind  turbine or a machine to produce solar cells).

In recent months, there has been a significantly reduced demand to produce these capital and consumer goods. Hence, there are few orders coming in for our machines. As the global economic crisis hits all our customer sectors, we are keenly aware of the negative impact this is having on the business of companies operating in the machinery and manufacturing sector.

The production of machine tools in Europe is expected to drop by 20% at least in 2009. The turnaround point for machine tools’ orders took place in the second quarter of 2008. In the fourth quarter of 2008, orders went down by 17% (seasonal adjusted) and even by 48% compared with the same quarter in 2007. We expect a much stronger drop in the next quarters, more then -60%. Orders coming from outside the EU may be the most affected, reflecting the tumbling demand coming from some Asian economies (especially China) and from Central and Eastern Europe. The European companies are also concerned that some clients’ companies that have already placed some machine tools orders may not be able to find the necessary financing for this investment in the end.

Due to seven-month orders’ backlog (the timescale between the order and the shipment of a machine), the impact on the output level of machine tools could be delayed until the beginning of 2009.

Now most CECIMO companies try to reduce their costs in order to adapt their production to the lower order books, which will have a direct impact on employment in the very short term.

We foresee a close down of many of our manufacturing companies all over Europe. For the moment, we are reducing interim staff and implementing flexible working time models, where possible. However, if this crisis situation continues, companies in our sector will be forced very soon to take more drastic measures. It is critical to their survival that they retain the core workforce of professional engineers and skilled workers who are essential to create our innovative and competitive technology products.

The consequences in the long run will be enormous not only for us but also for the European economy as a whole.

Once one of our companies is closed down, it is most unlikely that it will restart again in Europe due to many economic disadvantages compared with other regions in the world. Undoubtedly, the right skilled people will not be available anymore.

Loosing a European machine tool industry, will negatively affect the whole of manufacturing activity in Europe. Our Industry, our machines are a key element to sustain the manufacturing activity in Europe.

Only with our machines and manufacturing system solutions can industrial sectors, such as automotive, aerospace, power generation, medical products and general engineering, produce products more efficiently, more accurately, faster, cheaper and more environmentally friendly. These end-user industry sectors need our machines to stay competitive; they need our enabling technologies, our local know-how and presence. Do we want to become dependent on the machine tool producers in other regions of the world to be able to produce consumer products and capital goods in Europe? This point is emphasized by our tagline “Where manufacturing begins”. We are clearly of strategic importance for those sectors and for the European economy.

We request that the EU decision makers take actions together with us, to make our sector survive this turbulent period and to make our sector, and as such, the whole manufacturing industry in Europe, even more competitive to guarantee a future in Europe. CECIMO is a member of the High Level Group of the MANUFUTURE Platform and fully support their initiatives related to the economic crisis.

The machine tool sector fulfils a strategic role in manufacturing and as such is the key to any possible remedy for the economic crisis.

 The EU decision makers must take actions together with the machine tools sector, to help it survive and to make the whole of manufacturing industry in Europe even more competitive to guarantee a future in Europe.

The machine tool sector is now being severely affected by the economic crisis and must find a way to secure its future at the centre of the European manufacturing industry. In addition, the European Machine Tool Industry is a key element in sustaining manufacturing activity in Europe.

Filip Geerts, Secretary General of CECIMO presents the most recent figures and real bad forecast :  “In the fourth quarter of 2008, orders went down by 48% compared with the same quarter in 2007. We expect further reductions in the coming quarters, possibly more than -60%. With an average order to shipment time of around seven months, the real impact on production activity will be in the next months to come. Already there is a decrease of not less than 13% in production activity. Most CECIMO companies are now reducing their costs to align their production capacities to lower order books, which will have a direct impact on employment in the very short term.”

Mr. Javier Eguren, President of CECIMO, has a clear message: “In every plan or programme to rejuvenate European industrial activity and the European economy, the machine tools sector plays a strategic role.  Because of this, the sector first has to survive this extremely difficult period which requires adequate financial instruments.  The sector has to keep its skilled workforce on its payroll and to avoid layoffs. The sector must have the means to continue investing in training and innovation.”

It is not only “Where manufacturing begins” the existing tagline of the sector, but also “Without machine tools, manufacturing cannot restart quickly and effectively.”

The sector is an important part of the SOLUTION and is willing to contribute and to take up its responsibility.

CECIMO requests the EU decision makers to take actions together with the machine tools sector, to help it survive this turbulent period and to make the sector, and as such the whole of manufacturing industry in Europe, even more competitive to guarantee a future in Europe.

On 16^th July 2008, the European Commission launched a new industrial property rights strategy for Europe. Although there are already some multilateral and bilateral agreements as well as a European legislation in place to prevent and correct IPR abuse in the countries where European manufacturers do business, the challenge is now to better apply and enforce these laws in a coherent, balanced and intelligent way. 

Intellectual property is a key asset in Europe’s ability to compete in the global economy. Through innovation, high quality designs, effective branding and top quality products, EU companies are able to sell products at a premium price and therefore not to compete on price alone. However, The OECD estimates infringements on intellectual property at more than €150 billion per year, around 80% of which fake goods intercepted en route to the EU are made in China.  

The economic and social consequences of counterfeiting are very heavy for both manufacturers and countries, where there are IPR concerns. Economic impact comprises direct losses of sales, competitive disadvantage , product liability from defective imitation products, loss of goodwill and prestige, costs of market monitoring and instituting legal proceedings against infringers. Unemployment can also be generated in the affected industries in Europe, especially if some industrial relocation arises, whereas European manufacturers may reduce their foreign investments in countries where IPR are an issue. 

All WTO Member States are bound to apply the TRIPS Agreement, which set up some common standards for the prevention and border controls of Intellectual Property Rights. Despite these multilateral agreements and the EU legislation on the enforcement of the intellectual property rights, there is room for improvement in the application of controls and the enforcement. 

Having indentified that a strong industrial property rights system is a driving force for innovation and competitiveness in Europe, the new strategy of the European Commission outlines some key actions to be taken to promote high quality European industrial property rights, accessible to all innovators, and especially to small-and medium sized companies (SMEs). Those actions include the creation of a EU community patent and of a EU-wide integrated patent juridiction, the robust enforcement against counterfeiting and piracy, the launch of studies on the quality of the patent system and on the overall functioning of the trademark systems in the EU, as well as some measures to facilitate access to industrial rights and dispute resolution procedures. 

In the framework of this new European strategy on industrial property rights, CECIMO will launch a survey among their national members in order to understand better the concrete and operational difficulties encountered by the European Machine Tools manufacturers as far as Intellectual Property Rights are concerned. 

The results of this survey will also be a strong tool to discuss with the European institutions and namely with the European Commission in order to defend the interests of the European Machine Tools sector in the multilateral and bilateral agreements. 

more information on industrial property is available at: http://ec.europa.eu/internal_market/indprop/rights/index_en.htm 

The European Research Project PROLIMA (Environmental Product Lifecycle Management) has recently published the BEPM (Best Environmental Practice Manual), consisting of more than 100 eco-standards. Its purpose is to provide a series of ideas or practical guidelines targeting machine tool designer to help them devise more ecological machines right from the design stage. The standards address issues such as energy consumption, safety, vibrations, etc.

To have free access to the manual is as easy as fulfilling the registration form here

In answer to the Commission Consultation on “Energy efficiency in Manufacturing -The role of ICT”, machine tool industry answers: yes, we need research funding and certainly also in Information & Communications Technology (ICT).

Machine tools are efficient and they are modern. They are also continuously being improved. This is what keeps European Machine Tools competitive on the global market. Yet,each single production facility has to choose the right manufacturing system. This is a fundamental decision and industry should be supported by tools, which could facilitate the right choice. In addition, the design of each detailed chain for manufacturing process is performed with joint cooperation between customer and manufacturer. The manufacturer continuously faces the challenge of processes integration with the view on energy efficiency and high customer’s expectation. This is an  ICT research area.

Up to now, there has been no ICT research targeting machine tools in relation with energy efficiency. Now is the time for a change and the European Commission seems to realize this. CECIMO support this initiative.

There are several ongoing research projects, like PROLIMA and NEXT, considering environmental aspects through the entire life-cycle of machines. These projects aim also, indirectly, at increasing the manufacturer’s competitiveness. The energy efficiency can be also seen as a tool for cutting energy costs. By high commodity prizes, customers require low maintenance cost products. It should be not underestimated. Yet, in order to improve cutting of energy costs, Machine Tool Industry needs more research in this domain, especially in  ICT .

The EU targets an increase by 20% of energy efficiency by the year 2020. It can be achieved only if we find the financial means for an adequate research. CECIMO supports ICT research aiming at developing new technologies and at improving knowledge of existing ones.

We foster projects bringing practical solutions for existing techniques, techniques which will allow manufacturers to produce in the same price range. The manufacturers need to remain competitive.

The machine tool industry is the core industry, very strategic for European economy. This should not be underestimated.

Industry needs also standards, as they play a big role in research.  Standards should facilitate identifying which data is needed for disassembling, remanufacturing and so on to have a smooth information flow. Standards mean that many technologies can be integrated properly.  Standards are also needed for virtual factories, factories working together and for assembly in different localisations.

It should also be made clear that not only engineers should be kept aware of the energy efficiency issue. The right education can make people sensitive to environmental issues. Having energy efficiency driven customers, will make industry assure the right, energy efficient use of machines and expect customer buying energy efficient goods. A clear plan how to teach the public should be foreseen. Users should become convinced about the value of being energy friendly.

In addition, every research project should result in developing good and completely finished marketing product. We need a clear plan of how to commercialize developed products in order to keep the product alive.

Tools to develop low-energy consuming manufacturing strategies should be established as well as parallel tools for transferring the knowledge to the public. We need research for practical solutions.

This can be achieved provided that each Commission’s funded project will facilitate not only research itself but also its implementation after the end of the project. Clear roadmaps should be developed identifying where the new technology can be applied and implemented.