The technology industry can be and remain an important growth engine for the Dutch economy. But this requires a number of important steps. So concludes ING in the report My Smart Industry - grow smarter, grow faster.
ING begins its survey by stating that the technology industry has shown in 2017 that it can be that key growth engine of the Dutch economy that many experts envisage. So by the end of the year, the bank expects product growth of almost 10 per cent. But, it says, "success of the technology industry has a broader effect: namely, the sector plays an important role in innovation, stimulates activity in other sectors and drives productivity growth. Maintaining its role as a growth engine is therefore also relevant outside the sector, but starts with the sector itself. Throughout the study, by the way, a distinction is made between suppliers and final manufacturer, each of which has more impact or benefits in different areas.
Movement in market
A lot is already happening in the technology sector at the moment and this will only increase in the coming years. 'The energy transition is affecting several of the sector's markets. The other big trend is digitalisation. This will be a major boost for innovation, efficiency and quality, but it may ultimately also put pressure on added value at companies. At the same time, the sector has a strong starting position in several globally important markets, offering great potential for further growth.'
There are a number of product markets where there are promising growth prospects and which also give the Netherlands a strong position internationally. A number of markets stand out: agri & food, medical technology and the semiconductor industry. Especially in the latter category, the Netherlands has a unique position, both in terms of development and production. This is due in part to companies such as ASML and NXP, 'but around it is a strong cluster of some 150 companies and organisations. The further miniaturisation and new applications of chips provide plenty of growth opportunities until 2030. Dutch strength in precision technology is well reflected in this sector, as in medical technology.
While ING and specialists asked for their opinions for the study believe that the technology industry can do a lot for the Dutch economy, a number of steps are needed. It will only succeed if:
The sector is responding to the global demand shift
a) The technology industry has a strong position in a number of promising markets, including agri & food, medical technology and semicon. Mechanical engineering, in particular, can further benefit from this.
b) Part of the sector, especially suppliers, will be affected in terms of turnover by the energy transition. In particular, suppliers to the oil and automotive industry (fuel engines and related parts) will have to partly change their tack.
The sector's accelerated commitment to digitalisation to reduce waste in the chain
Efficiency in business and chain and thus high labour productivity is crucial for the competitive position of the technology industry. Digitalisation offers improvement opportunities across the board: from design to sales process and from logistics to production.
Digitalisation sector leveraged to grow in services
Through more services, the sector can grow in added value. Here, too, digitalisation plays a key role. The internet and data enable services such as remote maintenance and repair. Moreover, products are becoming increasingly complex. Customers will need more training or want to leave monitoring of processes to the technology industry.
R&D taking place more broadly in the chain
To grow the sector's added value (both in euros and as a percentage of each euro of turnover), more R&D is essential. Final manufacturers are often leading in this, but for a successful future of the sector and its own business, a greater role in R&D is required from suppliers.
Industry manages to find 120,000 new employees towards 2030
More employees are needed to keep growing, and that is a pain point. Already, 20 to 25 per cent of companies in the sector report that staff shortages are an obstacle to their operations. Value-added growth of over 4 per cent annually until 2030 is estimated to require around 50,000 additional employees. Add to this the approximately 70,000 employees retiring and the sector faces the task of recruiting 120,000 by 2030.
By: Kelly Bakker
Source: ING
