Scooters clustering efforts in Europe* *The opinions expressed are those of the authors, the consultancy Competitiveness (

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1 Scooters clustering efforts in Europe* *The opinions expressed are those of the authors, the consultancy Competitiveness (

2 Table of contents 1. Objectives of the case studies The clustering efforts in the PTW industry in Europe... 5 The Powered Two Wheeler (PWT) industry... 5 The Powered Two Wheeler industry in Europe... 5 The European challenge Have the clustering efforts been a driver for innovation in PTW cluster in Europe? Identifying the European bottle neck Initiative to restructure industry and business cooperation Successes and failures of the PTW clustering efforts in Europe In defining the perimeter for the clustering effort In setting the strategies to build a sustainable competitive advantage Learning from the PTW clustering efforts in Europe Implications for the local and regional support institutions Implications for the national and EU institutions Bibliography Table of figures Figure 1 PTW manufacture in Europe, (ACEM)... 7 Figure 2 Geographical presentation of the PTW industry in Italy... 8 Figure 3 The needed supply chain restructuring Figure 4 Formulating supplier strategies

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4 1. Objectives of the case studies Clusters and, more generally, regional agglomerations are often at the core of innovative development. It is widely recognised that new firms thrive in the proximity with other companies, investors, educational institutions and research centres afforded by clusters particularly in the presence of world-class academic institutions. Mobility can be maximised when there is a local labour market that allows regular flows of people from one situation to another, with accompanying diffusion of knowledge. As well as the greater opportunity range it is clear that barriers such as the need to move house or schooling for families are removed. However, it also emphasizes that minimising such barriers more generally will create a more functional society. It is important to ensure that clusters are defined in terms of the new market and knowledge relationships needed for emerging sectors to thrive. It is even counter-productive to reinforce traditional sectorial clusters as these may inhibit the necessary mobility. Firms in traditional sectors are far more likely to find innovative growth by forming new linkages and applying new technology to their existing products and services. This can be facilitated by opening the clusters to cooperation with and learning from other clusters in the same or other sectors

5 2. The clustering efforts in the PTW industry in Europe The Powered Two Wheeler (PWT) industry Powered two wheelers are getting more popular worldwide playing increasingly important role in the development of a fully sustainable integrated transportation system. This category of vehicles includes motorcycles, scooters, mopeds and cycle motors. Globally the market for powered two wheelers is divided into two major regions. The first one comprises US, Japan and Western Europe, where consumers mainly see the PWT vehicles as a pleasant way of transportation and already having one or more automobiles more expensive and powerful machines. The other region includes Asia/Pacific, Latin America and Africa/Mideast where PWT vehicles are the only means of transport for families and work purposes. These machines are cheaper and less powerful. The world demand 2 for PTW was estimated at 14 million vehicles per year in Since then, the market has been growing rapidly and is predicted to reach 55.7 million units in with annual rise of 5.4%. The increase will result from the growing demand both in developed and emerging markets. There will be sustainable demand for all categories of motorcycles, however China, one of the largest PTW markets, will move away from PTW vehicles toward automobiles. To compensate the decrease in demand developed markets will favour PTW production due to the rising fuel prices and restrictions on car use. The Powered Two Wheeler industry in Europe The future trend in the demand for the PTW vehicles in Europe is clearly seen now. Scooters, mopeds and motorcycles are affordable 2 The EU accounted for 12%, i.e. 1.7 million vehicles of the world demand. 70% of PTW found a customer in Asia (Japan excluded). China alone accounted for 30% of worldwide sales as although only 3 out of 1000 inhabitants would own a PTW, even at such a low density the huge population size creates the world's largest PTW market. 3 Source: Fredonia Group Inc., report October 1,

6 and simple transport, easily accessible by drivers of all ages. Traffic congestion, increasing price for gasoline, parking problems, ecologic issues, and restrictions to engines no bigger than 50cc and speeds up to 45 km/h encourage the use of PTW vehicles. If in 1998 the European 4 PTW Park consisted of 25.7 million vehicles then in 2004, the figure went up to 29 million unites. Europe was a leading production centre of PTW vehicles in the past. Peugeot (France), Triumph (UK) and BMW (Germany) have always been famous trademarks among powered two wheeler machines. Europe launched Piaggio Vespa (Italy), a global cultural icon of the PTW industry and continues offering new motorcycle marques such as Aprilia (Italy), Derbi (Spain), Ducati (Italy) and KTM (Austria). The share of European products is very small outside their birthplace counting to 2.6% of the US PTW market and to 0.5% of the Japanese market. In European countries EU producers occupy leading positions conceding 30% of its market only to Japanese producers. The high exchange rate of Japanese currency during past years improved competitive position of EU manufacturers but this is only a temporary factor. Structure of the European PTW industry The European PTW industry consists of mopeds 5 and motorcycles 6 production. Traditionally EU manufacturers have stronger position in the production of mopeds than in the production of motorcycles. Market fragmentation in Europe has favoured the coexistence of about 30 manufacturers among which there are some assemblers 7. The Piaggio Group, Peugeot MTC, and MBK are the three largest European PTW manufacturers. In 1990s, the three producers possessed more than 60% of European PTW production. When the overall PTW production fell by more than 30% over the period , there was a clear distinction in the product base between countries at that time: 4 Total EU Mopeds are two-wheel motor-driven vehicles with an engine displacement of 50 ccm or less, and a maximum speed of 45 km/hour. 6 Motorcycles are PTW vehicles that are larger and faster than mopeds. 7 BMW stands out as an integrated motorcycle and car producer 6

7 France and Spain manufactured mainly small-engine and utility machines Austria, Germany and the UK concentrated on larger capacity, higher value and enthusiast machines Italy focused on sports bikes and scooters The spread of the PTW production is not homogenous across the Europe. The production is concentrated in three regions 8 (Figure 1): Italy (Milan, Noeale, Bologna, Atessa and Pontedera) France (Saint Quentin) Spain (Barcelona) Year Austria AU Czech Republic CZ Germany DE Spain ES France FR Italy IT Portugal PT Sweden SE United Kingdom UK Total Figure 1 PTW manufacture in Europe, (ACEM) Geographically industrial players mainly locate near production and assembly sites with high concentration of manufacturing companies. Taking the example of Italy (Figure 2) the following clusters have been formed around particular manufactures: Milan around 2 manufacturers: Cagiva and Gilera Noale around 1 manufacturer: Aprilia Bologna around 2 manufacturers: Malaguti and Beta Pontedera around 1 manufacturer: Piaggio Atessa around 1 manufacturer: Honda 8 The three countries produced 96% of the European PTW in Direct employment was estimated at about jobs, and the total amount of the industry at more than jobs. 7

8 Figure 2 Geographical presentation of the PTW industry in Italy Other European manufacturers are in Italy: Benelli, Bimota, Ducati, Fantic, Husqvarna, Italjet, Laverda, Moto Morini, MV Agusta, Vespa and Moto Guzzi France: MBK, Peugeot Spain: Derbi, Gas Gas, Honda, Montesa, Rieju, Scopra, Suzuki For a long time, Italy has been a leading European producer. In 1993 it provided 50% of the mopeds and 70% of the motorcycles produced in the EU. Later the Italian PTW industry even strengthened its dominant position partially due to the framework policy carried out by Italian government. The policy stimulated market growth of the industry and helped the PTW manufactures to gain competitive advantage. The small size of the European manufacturers was a significant disadvantage of the European PTW industry comparing to the growing Asian manufactures. In 1992 on the PTW market, Japanese producers sold about 140,000 units of their 10 most popular models whereas European producers only reported 27,000 units. The polarised structure is another characteristic of the European PTW components industries. In 1995, there were nearly 2000 suppliers with a low average turnover value, ECU. Since then, PTW manufacturers have significantly reduced the number of component suppliers, but for a long time, 7% of the total number of suppliers accounted for half of the sales. Moreover, there have been only a few common suppliers, even in strategic components. 8

9 In the middle of 90s 44 biggest suppliers in the European PTW industry had the following characteristics: The majority of the companies were family-owned firms operating with a single production plant The dimensions of the main suppliers, with some exceptions of those supplying also the auto industry, were quite modest: 60% of suppliers had a turnover less than 25 million ECU; and 44% had a number of workers less than 200 Most suppliers were specialised in processes, operating vertically and carrying out labour intensive activities More than half of the companies operated only on domestic markets There was inadequate level of product and process innovation The majority of firms had weak quality assurance systems 9 but quite effective logistic systems 10 40% of the component suppliers had more than 50% dependency rate on 2-wheelers market The existence of numerous residual suppliers with a low unit turnover value demonstrated the de-centralisation of single operations instead of formation of the completely assembled systems. The lack of common suppliers showed a dispersion of specialisation that brought the following considerable consequences: Low standardisation of technical solutions among various PTW, even in the case of similar contents Fragmentation of the suppliers resources dedicated to R&D Low interest of manufacturers from automotive components towards the PTW sector Lack of industrial economies of scale. Globally, the European PTW manufacturers still have a good reputation in the global market of the powered two wheelers. Rich heri- 9 Even though most of the firms were audited by their clients (38 out of 44), only 9 out of 44 obtained the ISO 9000 certification and less than 12 carried out their supplies according to the selfqualification principle. In average, quality department represented some 4% of the total workforce firms out of 30 utilised order-driven integrated information systems and 21 out of 40 were linked to their clients through EDI systems. 9

10 tage of motorcycle history supports the image of European PTW industry which stands for products embodying both beauty and technical quality. The European challenge During the past decades, the European PTW industry has witnessed changes in its market potential in the global markets and in the evolution of demand. In parallel, the European players have been experiencing the consolidation of a single market within the EU. These factors have increased the competition and pushed the industry margins down. If for example the large motorcycles produced by European manufacturers are leading in important areas of technology, there are huge challenges in cost reduction, developing economies of scale and updating distribution channels. Additionally, restrictions on access by new riders or industrial competition from developing nations need to be faced by the right strategic actions. Competing in fragmented common markets and outside Europe In addition to the low absolute demand, the European PTW producers command a significant market share only in their home markets. They are virtually absent from the Asian growth countries and in other developing regions. Many tariff and non-tariff barriers, especially in Asia, close some important non-european markets. At the same time, the very same Asian countries enjoy a free access to the European markets. On the one hand, within the scheme of Generalized Tariff Preferences (GSP), the EU grants preferential import tariffs to the leastdeveloped countries to boost their economic development. On the other hand, the EU translates special relationships with for instance neighbouring countries or accession countries into tariff preferences. The European PTW Industry has fragmented structure where the industry is composed of a few large and many small producers. The fragmentation of the industry is the result of the fragmented European markets. Different technical standards, homologation procedures and driving regulations across Member States force producers to offer many different models. In fact, the harmonisation of 1 0

11 norms and standards in line with the Single Market programme has only begun. Additionally, the European PTW manufacturers face higher labour costs due to higher wage levels but also due to lower flexibility and more extensive labour regulations than their foreign competitors. In fact, the importance of European legislation and activities within all member countries has significantly increased, and it has become essential for the European PTW business to have a broad view of the complex economy, social, political, technical and legal issues surrounding European integration, regulation, harmonisation and trade. All these issues represent a great challenge for the motorcycle industry. While promoting competition, would the most effective policy be to reduce the number of regulations rather than creating new policies? Difficulties in developing economies of scale European industry faces tough challenges related to the market structure because European manufacturers of small motorcycles lag behind both in terms of manufacturing cost and massive-production of technologically advanced components. The handicap is too high costs and too small scale. In comparison with their global competitors, even large firms have insufficient size to exploit economies of scale. However, some progress has been made in both areas in terms of component standardisation. Additional strategic risk lies in the certain key components where European PTW producers are entirely dependent on Japanese suppliers, to some extent controlled by Japanese motorcycle manufacturers. In contrast to the manufacturers expectations, there still exist a large number of European suppliers that are less competitive than their Asian counterparts. These suppliers are still mainly interested in markets close to their facilities. The technological experience in individual components is very modest because quality control is not fully structured due to the inability to free resources towards technological development and economies of scale. 1 1

12 Briefly, one may state that the European component supplier s network is weak: they are characterised by an insufficient technological knowledge, insufficient quality and high prices. There s a lack of funds for aggressive R&D and investment. Losses, undercapitalisation and a predominance of family-owned enterprises are responsible for insufficient capital that can be mobilised for financing of expansion and R&D. It has become clear to the manufacturers that it is now time for a serious reorganization of the manufacturing processes: Only key competitive processes should not be outsourced It is necessary to decrease the vertical integration and go trough a gradual subcontracting to suppliers This needed restructuring, will have a tremendous impact in the nature of relationship between PTW manufacturers and suppliers. The market is forcing a supply chain manufacturing that leads suppliers to assume a more important role because: the future competitiveness of the European PTW industry leans on competitive component suppliers. Homogenization of local regulation Fashion influence Market fluctuation LEAN PRODUCTION Expansion into new markets Intense non- European competition Increased outsourcing by P TW manufacturing Sourcing of full systems + Delegation of design responsibility Figure 3 The needed supply chain restructuring The growing added value transfer to suppliers implies evolving from the purchase of client designed individual components into a procurement model based on full systems progressively designed by suppliers. The purchase of full systems has double benefit for the client: it saves the assembling costs of individual components and 1 2

13 gives the client more flexibility due to the reduction on the number of direct suppliers, and due inability to use standardised components in different models. On the other hand, lower number of direct suppliers and the co-operation among analogous suppliers and manufacturers may also help to develop constructive confidence and to create a minimum critical mass to address investment in technology. How to develop and increase trust between partners and managers, essential to develop both the favourable environment for innovation and future strategies for the SMEs and family oriented businesses? Low capacity to respond to changing demand In order to maintain the competitiveness in the future, the European PTW industry will have to increase scale through sales abroad. The manufacturers are forced to adopt more active commercial policies and to concentrate their efforts on brand building, communication, and right-on-time product launches 11. One key issue is the need to find the right balance between technology development and design, more related to understanding changing consumer requirements and taste. Some progress has already been made in terms of niche strategy development 12. The 50cc market has been affected by an important evolution characterized by a strong and continued decrease of the old mopeds replaced by modern and highly equipped scooters with approximately the same features as cars. The scooter market, which accounts for more than half of the European sales, is increasingly becoming a 11 The importance of time-to-market has increased due to the increasing influence of fashion on scooters and the continued outcome of new products addressed to specific market segments 12 In recent years, European PTW producers have been producing motorcycles designed to meet the specific tastes and requirements of particular groups of buyers, enabling small scale manufacturing and targeted sales. In addition, the adoption of modular designs has allowed them to simultaneously improve production efficiency and increase the number of models offered to bikers. 1 3

14 fashion-oriented market. In fact, product life cycle is decreasing from 10 to 3 years: the offer of new models grows at a very rapid pace. 13 During the past 15 years, the PTW market has been evolving, would it be for the small functional 125cc, highly developed scooters GT or the big cylinders. Successful manufacturers need to be highly creative as different consumer sectors ask from their dream bike to be funny vehicles oriented either towards the ease or the pleasure of driving, prestigious objects making a difference in the social circles, performing sports equipment or secure premium vehicles with integral ABS 14 combined with ASC taking into account the increase in the need for the sense of security. The latter has been increasing in importance during the past couple of years as the European players see how security and after sales services or the lack of it plays also on the image of the whole business (motorcycles, accessories, pilots and passengers equipment). In addition to that, the traditional distribution channels are getting outdated. For example, Internet sales are increasing in both new and second hand acquisitions. Besides being purely image creation tools for single marques, concessionaires have their own web sites, and the buying decision is often build on price comparisons, small announces, available information and advices on blogs. These create a counter power of consumers to institutional communication of marques, forcing the manufacturers to get closer to their clients. Today, the American manufactures are already used to such business, but the European players are still lacking behind. Also, in order to satisfy the growing number of price sensitive consumers, the sales figures of such mastodons as Géant and Auchan, who commercialise Chinese marques Jonway and Yiying, are getting higher and higher 15. At the same time, there are manufacturers who 13 Often, scooters are addressed to very young impulse buyers who value fashion, design, graphics and colour. Some manufacturers re-style the scooters every 6 months. Today, one estimates that there are more than 100 models in the market. 14 BMW was the first manufacturer to present ABS in motorcycles in 1986 and keeps on developing the technology further was a record year for the production of bicycles in China: production climbed to 80,430,000 units; about 10% more than in Electric bike production almost doubled in 2005; from 6,76 1 4

15 are looking for to establish long term relationships with end users and with those who play leading role in sales operations and big sales volumes. In such an environment, manufacturers must adapt to market demands in an attempt to anticipate the market and be able to offer the right model at the right time: time to market becomes critical. What actions should be launched to help local SMEs develop market driven innovative processes and products? How to break mental barriers to inter-sectorial innovation in order to better drive market rather than industry oriented initiatives? million units to 12,11 million; a big 79% increase. Despite the increase in the production, the Chinese bicycle industry is not bursting with confidence about the years to come. It s because worries are mounting on quality and image of the bikes produced; on the increased competition from countries like Bangladesh, Sri Lanka and Indonesia and on export subsidies that are dropping year by year. 1 5

16 3. Have the clustering efforts been a driver for innovation in PTW cluster in Europe? As common European markets and national PTW clusters fall behind in sales volumes, it seems interesting to explore possibilities to drive competitiveness reinforcement actions at European, trans-national level, combining strategic analysis, change management tools and common policy work. Identifying the European bottle neck The Motorcycle Industry in Europe (ACEM 16 ) Task Force clearly stated the fundamental need for European PTW supplier cooperation, and the diagnosis of the PTW European industry realized by the manufacturers was further discussed during the Milan conference European PTW Industry on 1st and 2nd Tier Suppliers Cooperation, held in November After the seminar, and in order to grasp the supplier s interest for the following steps, personal telephone interview was carried out with some suppliers (representing 70% of conference participants). The main results were the following: Most suppliers share industry diagnosis The areas of enhancement agreed by suppliers coincided with the needs found by manufacturers: cost reduction 17, technology update, flexibility and quality improvement Suppliers also share the need to cooperate with manufacturers in order to implement these enhancement processes (in contrast, co-operation with other suppliers was not considered relevant, even impossible for competing suppliers) 16 The Motorcycle Industry in Europe (ACEM), created in 1994 by the merger of 2 PTW manufacturers associations (ACEM and COLIMO), is the professional body representing today 11 PTW manufacturers, 11 national associations, and 3 guest members present in 11 European countries. ACEM members represent a turn-over of 10 billion EURO and jobs % of suppliers interviewed identified cost reduction as a priority area of enhancement for their companies. 1 6

17 Globally, interviewed suppliers unanimously are wiling to take part in further meetings at the European level with manufacturers and other suppliers in order to share needs and launch co-operation initiatives 18, the first step in getting a more outstanding role for the suppliers. In the first place, interested suppliers needed to take a strategic decision on how to compete because not all of them can be turned into full system suppliers because it requires standardisation of components and technological leadership (both in products and processes): Suppliers with needed capacity saw that larger volumes could give access to economies of scale in manufacturing and R&D. They needed additional abilities to develop integrate components from other suppliers and to take part in the first steps of design for new models together with client manufacturers. The suppliers who did no wish or could not develop such potential needed to undertake a different strategy. They had the opportunity to concentrate on individual component manufacturing, showing their cost and logistic advantages and assembly expertise. They were able to compete at a local level that needed production flexibility. Initiative to restructure industry and business cooperation Agreement to cooperate 19 is not the most difficult part in the process to reinforce industry s competitiveness. The most difficult part is how to do it: building trust between industry agents through an action-oriented process % of interviewees were interested in taking part in system and subsystem development programmes together with manufacturers and other suppliers. 46% thought their company would be more successful if agreements with other suppliers could be signed to develop full systems. 19 Would it be between suppliers and manufacturers, among suppliers themselves, or even between governments and the private sector 1 7

18 In this respect, it became convenient to launch a programme under the auspices of the European Commission to restructure the European motorcycle suppliers for international competitiveness. Given the importance of the scooter segment for the European PTW industry, the first PTW supplier restructuring pilot programme was carried out in that segment. As an important mentality change was required among the vast majority of agents in the sector (manufacturers, public institutions such as European Commission, and cooperation agents), the intervention of a specialized consultant team was needed to: identify the areas of agreement among analogous suppliers and manage the change management process. The participants agreed on the following final objectives of the initiative: 1. Achieve a two tier supplier structure for the scooter industry o 1 st tier suppliers assumed the role of leaders in the component systems development o 2 nd tier suppliers coordinated their developments through 1 st tier suppliers 2. Develop joint programmes in technology, production processes, quality systems, etc. among non-competing 1st tier and 2nd tier suppliers in different European countries 3. Identify potential standardized components that would need non- European technology Defining the strategic business segments European component suppliers may be grouped by technology, materials or geographic location. However, at a strategic business segment level, two supplier typologies needed to be identified according 1 8

19 to their differentiated interaction with clients: standard component suppliers 20 and personalized component suppliers 21. Grouping PTW manufacturers and suppliers by strategic business segments allowed the design of cooperation programmes that adapted to the specific needs of a group of companies sharing the same interests. Suppliers need to understand how they c ompete s trategic ally Standard components suppliers Global markets Technological Leadership C ritical Mass Personalized c omponents s uppliers Global markets E xcellence in cost and logistics P roduction flexibility Figure 4 Formulating supplier strategies Both supplier groups needed to reinforce their competitiveness through costs reduction, quality improvement and better services. Nevertheless, to differentiate suppliers by specific typologies it is necessary to upgrade technology, introduce standardisation and system development. Action building to reinforce the chosen segments The steps to reinforce competitiveness for standard component suppliers took into account the need to develop critical mass to attain 20 Standard component suppliers compete for technology differentiation. Standard components can be assembled for various models by different manufacturers. They need to be continental in order to have the capacity to obtain economies of scale in R&D and manufacturing processes. The component becomes standardized when it acquires technologic supremacy at a sufficiently attractive cost and the motorcycle manufacturer includes it when designing the new model: brakes, speedometers, suspensions, engines, Personalized component suppliers are suppliers with capacity to provide tailor-made responses to manufacturers needs. Those suppliers compete in client proximity and services related to product differentiation. As the supplier size is conditioned by the client entity, they often diversify their activities beyond the motorcycle industry. 1 9

20 economies of scale in R&D and production processes. Such critical mass must be sought by suppliers while operating at a global level, and developing standard components that can be used by the largest possible number of world manufacturers at the early design steps of new models. Therefore, abilities in co-design needed to be developed to comply with the most demanding international quality standards. Such requirements may be addressed by cooperating in pan-european programmes with other non-competitor standard component suppliers and with motorcycle manufacturers. Personalized component suppliers tend to address substantially different competitive challenges: increase their personalized service level to assure required production flexibility close to the clients. Risk needs to be diversified beyond the motorcycle industry and technology contributions usually come from other industries. Cost reduction as quality enhancement is determined by local motorcycle manufacturers. To address these challenges, cooperation must be driven at cluster (geographical concentrations) level, which may include European inter-cluster joint cooperation technology programmes at later stages. In other words, the development of systems with full supply has different implications depending on suppliers business segment. The systems developed by standard suppliers will tend to become more universal, with long series. On the contrary, personalized component suppliers may develop the systems suitable to differentiate models and brands and, therefore, those that demand higher production and logistics flexibility. Scooter Suppliers' Project The project was initiated by the by ACEM, the European Powered Two Wheeler (PTW) association. The objective of the project was to make a transition of the PTW supplier base into two tier structure because PTW manufactures moved to purchasing full components systems. The pilot project consisted of three stages: 1 st stage November 1996 February

21 Facilitating internal strategic change in the supplier company 2 nd stage March 1997 December 1997 Creating trust within suppliers in one cluster 3 rd stage January 1997 June 1998 Creating trust between supplier groups or tier 1 suppliers and manufacturers The project aimed to enhance the competitiveness of PTW manufactures worldwide through finding ways towards cost reduction, technology improvements, productivity increase, flexibility, and better quality. Another objective was the development of joint programmes in technology, production processes, quality systems, management techniques etc. among noncompeting tier 1 and tier 2 suppliers in different European countries. The expected results of the projects were the following: increase in the number of European 1st tier component system suppliers; decrease in the number of suppliers of some parts but increase in scale and competitiveness of the remaining suppliers; smaller technology gap for critical components between the EU and Japan; better industrial cooperation both in the European PTW clusters and at the international level (Japan) consolidation of European employment in the PTW industry 2 1

22 4. Successes and failures of the PTW clustering efforts in Europe In defining the perimeter for the clustering effort In setting the strategies to build a sustainable competitive advantage The European Scooter Suppliers Cluster Project driven in was instrumental in enhancing the linkages between European PTW actors. The project resulted in the creation of some real European SMEs 22, but it failed in forcing the large OEMs 23 to join forces in the areas related to the needed economies of scale, for example in a project to develop joint engines. In fact, the OEMs preferred to use their influence in front of their national governments to obtain special treatments (financial, labour flexibility ), rather that to follow the recommendations coming out of the cluster project. The unfortunate result of not joining forces is that basically all the European PTW industry lost in competitiveness. It seems that while trying to create a competitive Europe, it might be useful to prevent national and regional governments protecting their short term champions in order to ameliorate the competitiveness of the whole European industry, especially in such a specific business as PTW is. At the same time, giving direct financial support to artificial interclustering organisations, which have recently become the new trend in European industrial and innovation policies, should be avoided because of the risk of failing in concrete results. 22 For example an Italian and a Spanish supplier joined their forces to set up a plant in France 23 Piaggio, Aprilia, Peugeot, Derbi, etc. 2 2

23 5. Learning from the PTW clustering efforts in Europe Implications for the local and regional support institutions When approaching a cluster initiative, it is essential to set the good perimeter for it: it has to cover the whole value chain from the suppliers to the market, it means, all the necessary actors to develop a business and reach the market. Implications for the national and EU institutions Today, in addition to the trans-sectorial competition, taxation or employment rules, PTW business is influenced by the policy frameworks and regulations related to integrated transport strategies, local transport plans, countryside traffic management strategies, or sustainable transport and road safety programmes. The European Commission s White Paper of 2001 European transport policy for 2010: time to decide aims to promote a sustainable transport policy. The White Paper proposes to achieve sustainability by gradually breaking the link between transport growth and economic growth, principally in three ways: changing the modal split in the long term, clearing infrastructure bottlenecks and placing safety and quality at the heart of the transport policy. Both the Federation of European Motorcyclists Associations (FEMA) and ACEM participated in the mid-term review conference of the White Paper held in Brussels late Thus, in its final version motorcyclists are mentioned three times : twice in the context of dangers in road circulation and once in the context of presenting a slight interest in changing priority lane allocations by some local authorities in cities and conurbations PTW industry is not mentioned even once, leaving the interests of the business far behind questions on European railway infrastructure or overloaded airports. In November 2006, at the invitation of the Finnish Presidency of the EU and of the Italian Ministry of Transport, ACEM participated in the 2 3

24 4 th Verona Ministerial Conference of European Ministers of Transport. ACEM 24 fully supports the objective set up in the European Commission s Road Safety Action Programme to halve the number of road accidents on European roads by the year Thus, once again, the press release of the 2772 nd Council Meeting on Transport, Telecommunications and Energy held in Brussels at the end of the Finnish EU presidency in December 2006 mentions motorcyclists as vulnerable road users, but does not deal with reinforcement of the European PTW business at all. It is evident that the PTW industry relies on the availability of efficient and safe logistics in order to ensure the shipping of components and to provide just in time delivery of motorcycles and scooters across the EU, but it is not enough to strengthen the European PTW business. Being industry s and transport s stakeholder, ACEM and its members look forward to contributing to the definition of Transport Policy, at EU level and in the Member States, for a more competitive economy and an improved mobility in Europe. Currently, an EU directive concerning the harmonisation of legislation on measures against air pollution by motor vehicle emissions is looking for to have a straightforward impact on costs and on the environmental impact of motor vehicles 25. The European Commission believes that green public procurement would help motor manufacturers to build the market credibility of less-polluting and moreenergy-efficient vehicles. To date, at the EU level, framework on state and regional aid to PTW business has been drafted 26. Moreover, there are regulations with intentions to increase competition in the PTW sector for example in lowering the cost of owning and using motor vehicles, and 24 The European PTW industry responses are related to the development of new technologies in vehicles, to innovative training programmes and disseminating PTW friendly best practices in the field of road infrastructure or to new safety-oriented advertising guidelines. 25 See directive 2001/100, OJ L16 ( ): Motor vehicle emissions technical controls 26 For example, communication OJ C 368 ( ) determines the Community framework for State aid to the motor vehicle industry and communication OJ C 70 ( ) contains a multisectorial framework on regional aid for large investment projects, excluding transport sector but containing specific provisions for the motor vehicle industry. 2 4

25 thus discouraging the shift to other modes of transport 27. Nevertheless, one may argue that discouraging competition in the PTW sector is not the most efficient way to promote that kind of modal shift! Actors like ACEM are committed to continually develop and maintain a strong and viable PTW industry in Europe and can be a competent partner of European institutions. 27 See regulation 1400/2002 of 31 July 2002 on the application of Article 81(3) of the treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (OJ L 203, 01/08/2002). 2 5

26 6. Bibliography ACEM and The Cluster Competitiveness Group: European Supplier Industry Analysis Survey by five large European PTW producers, ACEM: Yearbook Facts and figures on PTWs in Europe European Commission: 2772 nd Council Meeting on Transport, Telecommunications and Energy. Press Release 15900/06 (Presse 343). Brussels, December European Commission: European transport policy for 2010: time to decide. White Paper. Luxembourg, MKC: A Sustainable Integrated Transport Strategy for Milton Keynes ; January Task Force of European Manufacturers of the Motorcycle Industry: Input Report