EPP regional and local leaders took part in the ECON Commission seminar on Industrial Transition in the EU, Chemnitz, Saxony: From the cradle of German automotive engineering to a pioneer in green transformation, and shared perspectives on the topic and emphasised the links between competitiveness, industrial change, the conditions for a just transition and the need for more synergy among EU tools and instruments and for LRAs to bring all innovation actors together. A holistic policy approach means grounded solutions!
The automotive industry accounts for more than 7% of EU GDP and currently employs – directly or indirectly – more than 14 million Europeans, equivalent to 6.1% of total employment in the EU. Local and regional governments play a key role in supporting the automotive industry's transition to new technologies and a sustainable future by providing funding, infrastructure, training, and other resources. Training and education will be needed to ensure the workforce has the skills needed to produce vehicles not driven by combustion engines.
Participants in Chemnitz, which will be European Capital of Culture 2025, exchanged on the sectoral challenges for regional development more broadly: petrochemicals clusters, infrastructure, automotive and steel, notably. In a recent OECD study, it has been made clear that some manufacturing activities are indeed among the most difficult human activities to make climate neutral and they are typically regionally concentrated. Industrial regions need to know how they are affected about the changes needed for climate neutrality. The socio-economic vulnerabilities of affected regions, their manufacturing businesses and workers need to be fully considered.
The seminar provided for exchanges on how EU policy can help tackle deep transitions in the industrial sector and in attracting and reskilling skilled workers. Moreover, it focused on SME policy in facilitating access to finance for a green transition. The seminar showcased how the Chemnitz/Zwickau region manages to promote the implementation of the Sustainable Development Goals (SDGs) in parallel with economic recovery. Indeed, the seminar included a study visit to the Volkswagen Factory in Zwickau for a Dialogue with Management and Workers' Council. The Volkswagen plant in Zwickau (Mosel) is the first Volkswagen plant that has already been fully converted to the sole production of electric cars.
The host, Minister Thomas Schmidt, Regional Development Minister, Free State of Saxony, and Chair of the Automotive Intergroup (CoRAI) and CoR Rapporteur on 'European Chips Act for strengthening the European semiconductor ecosystem', outlined the interplay and roles of science, economy, administration and services. He provided an overview of how the seminar assesses the matter of finding balance in an automotive industry in transition between regulation and freedom. "The transition is already taking place. We now have to formulate clear definitions, clear legal frameworks and also leave some freedom, and look into financial aid. Science and R&D are further key aspects. Economic diversification and the ramifications on production are considerations yet to be fully assessed." Concluding, Minister Schmidt also commented on the impact of the Inflation Reduction Act (IRA), and at least possible temporary protection measures of the European automotive industry.
The European Union’s goal for climate neutrality by 2050 has triggered a massive transformation process in the European automotive regions, which has a huge impact on regional economic growth, employment and innovation processes.
Speaking on Green Industrial Change, EPP participants made the following remarks.
Sven Schulze, Minister, Ministry of Economics, Tourism, Agriculture and Forestry, Saxony-Anhalt, and CoR Rapporteur on 'A Just and Sustainable Transition for Automotive Regions' said "The transformation process in the automotive sector happens in the regions and thus this transition must be technically feasible in the regions. The question needs to be asked whether the industry is truly in a position to implement what is being asked in terms of objectives and regulations. Giving the example of Saxony-Anhalt, 25,000 jobs are in the supply chain of the automotive sector alone, and this figure risks declining to half that with the transitions currently going on. A European transition strategy is crucial for the EU so that European automotive industry can embrace new technologies and stay at the forefront."
Markku Markkula, Vice President of the CoR, President of Helsinki metropolitan region, Finland commented on the transitions and what from his perspective is needed across all levels. He said that Europe's future is built on the upgrading of innovation and this means concretely going deep into places-based policy innovation, continuing that the newly launched Partnerships for Regional Innovation are a key tangible way forward. "Europe needs territorial-driven industrial transition and this involves the integration of the Sustainable Development Goals, giving the example of what is done in his own region. Synergy is crucial, between research and regional policy. The co-creation of EU Missions and other such initiatives are important, on how to implement growth through bottom-up road-maps, giving the example of his region's goal of being carbon neutral by 2030. The role of industry in new technologies is vital, giving the case of 6G, Artificial Intelligence and quantum technology".
On Automotive Regions in Transition, Barbara Eibinger-Miedl, Minister for Economic Affairs, Tourism, Regions, Science, Research, Styria, Austria, part of the Just Transition Platform (JTP), said “the current transformation of the automotive industry requires appropriate support from the EU.”
Pehr Granfalk, Solna, Sweden and ECON Vice-Chair, said "a clear message from the car industry here is that the EU must have a greater openness to new technologies and fewer regulations, otherwise the transition will never be profitable."
Background:
A just and fair transition towards decarbonising the transport sector is the primary concern of the Automotive Regions Alliance, a political network of regions committed to the successful transition of the European automotive and supply industry. The Alliance is an initiative of the European Committee of the Regions that recognises the need for decisive action to achieve the EU's climate targets and aims to bring together regions with a strong automotive sector that want to play an active role in decarbonising the transport sector and contribute to achieving the European Green Deal targets to ensure a just transition for automotive regions.
Moreover, the European Semiconductor Regions Alliance (ESRA) was referenced during the course of the seminar. ESRA was indeed initiated in September 2023, by Saxony.