Ferdinando NELLI FEROCI
European Commissioner for Industry and Entrepreneurship
La Spezia, 10 October 2014
Dear Minister Pinotti,
Dear Ministers,
Honoured guests,
Ladies and gentlemen,
Introduction
I would like to thank Minister Pinotti for having invited me to this important event.
This seminar gives us the
opportunity to speak about SMEs and their importance in strengthening
the European Defence Technological and Industrial Base (EDTIB).
SMEs play a central role in our economy.
They represent 99% of Europe's
businesses and create more than two thirds (2/3) of employment in the
private sector. No less than 58 cents of every euro value added in the
European economy comes from SMEs.
Just last week I held a keynote
speech at the 2014 SMEs Assembly that took place in Naples. This annual
event that was co-hosted by the European Commission and the Italian
Presidency set the stage for a major debate on a number of vital
questions facing EU competitiveness.
After many years of almost
exclusive focus on the challenges posed by the economic crises, the
European Council last December finally returned to the issue of defence.
This was timely and critical as
it set out a clear framework to establish a meaningful Common Security
and Defence Policy (CSDP). While it is clear that the majority of the
burden falls on Member States, the European institutions keep an
important role. This includes, as the European Council recognises, the
Commission and our key role is to support the development of a robust,
competitive and innovative European Defence Technological and Industrial
Base.
Our plans in this area were set
out in our Communication of 2013 and in the implementation Roadmap that
followed. This Roadmap takes into account the priorities which the
European Council set last December. For the Commission these are:
1) Full implementation of the two Defence Directives ;
2) EU-wide security of supply ;
3) Dual-use and CSDP-related research ;
4) Support for SMEs ;
Importance of defence-related SMEs
I am proud that the Commission
has put support for SMEs high on its agenda. SMEs have had to navigate
through difficult times and this is particularly true for
defence-related SMEs.
They are confronted with
shrinking national demand, time consuming and costly rules and
regulations, difficulties in getting the necessary financing and they
operate in fragmented markets while functioning as essential building
components in what are usually complex production chains.
For example, the supply chain of
the German Leopard II tank involves no less than 1,500 companies, many
of which are SMEs. At the same time they are the driving force of
innovation, economic growth and job creation. They can be found in all
Member States and provide an estimated 17% of all defence sales in
Europe. An important reason for this is that the strength of the
European defence sector lies in its ability to cross-fertilise with
other industrial sectors.
Take for example the Eurofighter
Typhoon, Europe’s largest military aircraft programme in which Italy is
a key partner. This programme is estimated to have created 100,000
highly skilled jobs spread over 400 companies, many of which are SMEs.
It also inspired technology spin-offs to civil aircraft and automobile
industries, including Formula 1 cars in Italy, for a total value of at
least €9 billion.
We are moving towards a world in
which defence equipment incorporates civil components and technologies
and where defence companies are more and more active on civil markets.
Most defence-related SMEs
already generate between 39% and 62% of their total sales on the
civilian market. This increased cross-fertilisation is opening up new
business opportunities which should be supported by a well-functioning
internal market.
One crucial way to support SMEs
is to foster access to all markets rather than just their domestic one. A
first step in this direction is to ensure the full and correct
implementation of the Procurement and Transfer Directives.
Focusing on the Transfers
Directive, it is important to stress its support for a genuine internal
market by introducing a new simplified system of licensing and
certification of defence companies. The objective is to reduce the
administrative burden on both Member States and industry for transfers
within the EU.
A recent study shows however
that smaller companies in particular consider the certification process
to be burdensome and time-consuming and do not see many advantages in
using the new licencing system introduced by the Directive.
We are urgently addressing this
by discussing with Member States and the industry how to better raise
awareness of the benefits of the new system and to have a more
harmonised approach in its implementation.
As to the Procurement Directive,
the Commission will monitor the defence markets. We will also clarify
the use of certain exclusions from the Directive, namely
government-to-government sales and purchases via international
organisations and agreements. We do not intend to prohibit or limit the
use of these exclusions, but to ensure legal certainty for contracting
authorities who use them.
The Commission will also
continue working towards the phasing out of offsets which are
contradictory to the logic of the Single Market. We are aware, however,
of concerns expressed by some Member States that without offsets, their
SMEs would not get access to the market. To overcome this, we will work
with stakeholders towards non-discriminatory alternatives for
facilitating cross-border market access for SMEs and to improve the
application of the sub-contracting provisions of the Procurement
Directive.
This is why the Commission will
establish an Ad-hoc Advisory Group by the end of this year. This Group
can help us in preparing concrete proposals for action for the European
Council of June 2015.
Industrial policy actions and practical support
At the same time, we also want
to look at practical ways with which we can directly support Europe's
defence-related SMEs and we want to start doing so as soon as possible.
I am therefore proud to present
to you our NEW guidance document for SMEs and Regional Authorities
dealing with the availability and the eligibility rules for accessing EU
funding for dual-use projects.
This guide is there to help SMEs
access the funding instruments and to help regional authorities in
developing dual use strategies and ensuring synergies between the
different EU funding sources.
We have committed ourselves to
offer practical guidance to SMEs on how to access the many powerful
instruments that the EU has at its disposal. I refer here in particular
to COSME, Horizon2020 and the Structural and Investment Funds.
For the first time, the EU has launched a programme for the competitiveness of SMEs, COSME, with a budget of €2.3 billion.
A first priority of COSME will
be to tackle access to financing. One third of SMEs that request a loan
in Europe are being refused. Through the COSME financial instruments,
guarantee loans and equity investment can be made available.
Another priority is access to
new markets. COSME will for example support the establishment of
European Strategic Cluster Partnerships. These Partnerships can be used
to bring defence-related clusters in contact with other industrial
clusters, build joint strategies towards third countries and better
support SMEs in global competition.
Following a bottom-up approach,
it will be up to the defence industry to seize the opportunities and
respond to the calls for proposals that are expected for November 2014.
COSME is also funding the
Enterprise Europe Network which can help defence-related SMEs develop
new business opportunities in other sectors through networking and
partnership, internationalisation of their activities, and technology
transfers. The Network is an excellent tool to promote civ-mil
cross-fertilisation for dual use products, as it has so many relevant
industrial sectors on board, such as ICT, Maritime, Nanotechnologies and
Aerospace.
The biggest EU Research and
Innovation programme Horizon 2020 with a budget of €80 billion over
seven years provides, amongst others, funding for early stage, high risk
research and innovation by SMEs.
Whereas Horizon 2020 has an
exclusive civilian focus, it covers many areas with high dual use
potential such as Security Research and Key Enabling Technologies
(KETs). Currently, a Working Group of the High Level Group on KETs is
examining how the dual use potential of KETs could be further
accelerated.
The Commission is also exploring
the best way for establishing the Preparatory Action on CSDP-related
research. This Preparatory Action would be outside of Horizon 2020, run
for maximum 3 years and probably have a budget of not more than €50
million. This initiative will also provide opportunities for SME to play
an important role.
And lastly we should not
overlook the potential of the ESIF. Over the period 2014-2020 more than
€140 billion in regional funding will be available for investment in
innovation and industrial competitiveness. Another €74 billion will be
invested in skills, training and smart qualifications.
Clearly, this money cannot be
invested in projects with a purely military nature. However, there is a
large – and often untapped – potential for dual-use projects and
technologies.
Let me give you an example:
In February 2014, a pilot
project supported by the EDA began under the name of ‘TURTLE’. The
project is led by “SME” (Silva Matos Metalomecanica), but involves also a
technology laboratory, a school of engineering, and a navy research
center. It became the first project to receive co-funding for dual-use
development.
The co-funding is worth
€770.000, that is 60% of the total project cost, and supports the
development of a robotic vehicle for underwater operations that can be
used for both civil and defence applications. I think this is also an
excellent example that demonstrates the importance of clustering.
But we do not want to stop with
publishing a guidebook. We also have taken a number of other actions
aiming to help the defence community further exploit the potential of
these sources of funding:
Firstly, the publication will be
supported and supplemented with seminars and workshops across the EU to
raise awareness with interested Regional Authorities and
defence-related SMEs. The next event will be on “Dual use and smart
clustering”, to takes place the 25th of November, hosted by the European
Commission, the European Defence Agency and the Association of Regional
Development Agencies (EURADA).
Secondly, the Commission will
support the creation of a defence related regional network. Such a
network will aim to disseminate best practice in accessing the European
Structural and Investment Funds but also help regions and Member States
to integrate defence into smart specialisation strategies.
Thirdly, the Commission will continue to work closely with the European Defence Agency.
Next to these concrete steps,
there are of course other important actions in our implementation report
which are of relevance to SMEs, such as in the areas of security of
supply, standardisation and raw materials, to name only a few.
Conclusions
The competiveness of the
European defence industry is a priority for the Commission and the
future strength of European Defence Technological and Industrial Base
will depend on SMEs, as much as on the biggest companies.
The conclusions of the European Council have paved the way for the years to come. The Commission will do its part.
We will work in a transparent way and in close collaboration with the Member States, the EDA, key partners and the industry.
I think today's Seminar offers
an excellent opportunity to discuss how we could cooperate together to
take full advantage of the new instruments and tools that will be
available in the coming years. We will need to work together for a
European defence industry that is more competitive, integrated and
innovative. We need an industry that gives Europe a strong and
independent voice on the global stage.
Thank you for your attention.