Regional Innovation Monitor Plus 2016

30 May 2016

Regional Innovation Report Lower Saxony (Advanced Materials)

To the European Commission Internal Market, Industry, Entrepreneurship and SMEs Directorate-General Directorate F – Innovation and Advanced Manufacturing

www.technopolis-group.com

Regional Innovation Monitor Plus 2016

Regional Innovation Report Lower Saxony (Advanced Materials)

technopolis |group| in cooperation with

Henning Kroll, Fraunhofer ISI

Table of Contents

Executive Summary 2! 1. Advanced Manufacturing: Advanced Materials 6! 1.1 Overview of performance and trends 6! 1.2 Business sector perspective 7! 1.3 Scientific research potential 10! 1.4 Role of intermediary institutions 11! 1.5 Developing skills for the future 13! 1.6 Major investment projects 14! 1.7 International cooperation 16! 1.8 Good practice case: LeichtbauCampus Open Hybrid LabFactory 17! 1.9 Leveraging the existing potential 22! 2. Regional Innovation Performance Trends, Governance and Instruments 26! 2.1 Recent trends in innovation performance and identified challenges 26! 2.2 Institutional framework and setup 29! 2.3 Regional innovation policy mix 32! 2.4 Appraisal of regional innovation policies 37! 2.5 Policy good practice 40! 2.6 Possible future orientations and opportunities 42! Appendix A : Bibliography 46! Appendix B : Stakeholders consulted 47!

Table of Figures

Figure 1: Economic Growth in Lower Saxony 2000-2014 ...... 8! Figure 2: Open Hybrid LabFactory Thematic Focus ...... 18! Figure 3: Members of the Open Hybrid LabFactory ...... 19! Figure 4: New Building of the Open Hybrid LabFactory ...... 20! Figure 5: Open Hybrid LabFactory Exemplary Layout ...... 21! Figure 6: Share of SMEs in business R&D personnel (in %) ...... 26! Figure 7: Intra-regional disparities in Lower Saxony (Qualification) ...... 27! Figure 8: Share of R&D-Personnel in overall industrial employment 2009 (in %) ..... 28! Figure 9: Personnel employed in Higher Education ...... 28! !

Regional Innovation Monitor Plus 2016 i

List of Tables

Table 1: The most important industrial branches in Lower Saxony, 2013* ...... 9! Table 2: Export quotas in Lower Saxon industries, 2013* ...... 9! Table 3: ESIF allocations to Lower Saxony past and present ...... 33! Table 4: Regional Innovation Support Measures ...... 36!

ii Regional Innovation Monitor Plus 2016

PREFACE In the context of the growth and investment package set out in the Investment Plan of the European Commission, the Regional Innovation Monitor Plus (RIM Plus) provides a unique platform for sharing knowledge and know-how on major innovation and industrial policy trends in in some 200 regions across EU20 Member States. Launched in 2010, the Regional Innovation Monitor aimed at supporting sharing of intelligence on innovation policies across EU regions. Building upon the experience gained and results obtained during the period 2010-2012, the RIM Plus 2013-2014 provided practical guidance to regions on how to use the collected information, via a network of regional experts. Since 2014, the RIM Plus has introduced a thematic focus on advanced manufacturing. The RIM Plus 2015-2016 evolved from a general monitoring of innovation policies towards establishing a more thematic focus in selected areas in order to contribute to improving the competitiveness of European regions. Particularly, the RIM Plus aims through its activities and in close cooperation with the regional stakeholders and other relevant initiatives to: •! Contribute to the development of new and open spaces of collaboration and exchange on advanced manufacturing, each with a clearly defined thematic focus. •! Play an enabling role in providing evidence-based information on specific themes and bring in outside perspective from other regions. •! Map out regional practices in support of advanced manufacturing and relevant pilot/demo projects and work towards involving the relevant stakeholders. •! Provide an easy access and comparative overview of regional innovation policies and relevant actions in the field of advanced manufacturing. •! Share the lessons learned with the European Commission services to feed into the preparation of future programmes. The main aim of 30 regional reports is to provide a description and analysis of developments in the area advanced manufacturing with a clearly defined thematic focus and regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Final EU Regional Innovation Monitor Plus report. European Commission official responsible for the project is Alberto Licciardello ([email protected]). The present report was prepared by Henning Kroll ([email protected]) (Fraunhofer ISI) . The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Regions, Member States or the European Com- mission. Copyright of the document belongs to the European Commission. Neither the Europe- an Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear. Further information: https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor

Regional Innovation Monitor Plus 2016 1

Executive Summary

1. Advanced Manufacturing: Advanced Materials Lower Saxony’s advanced manufacturing competencies are mainly concentrated on a number of key clusters in (formally) mid-tech industries, most prominently the automotive cluster in and around Wolfsburg. Per se, there is nothing wrong with such strongholds as their large production facilities help secure regional employment and economic well-being. Moreover, the regional location of corporate decision-making in key headquarters prevents the region’s large production facilities from being relocated when framework conditions change – or at least mitigate that effect substantially. Moreover, most of the region's industries are mid-tech on the outside and high-tech at the core, as evident in the example of the car industry. •! Challenge 1: R&D concentration on a limited number of industries Despite the indisputable value of the existing poles of excellence in the automotive and a few other fields, concentration comes with vulnerability – in the short run to corporate crisis and sectoral/technological cycles, in the long run to technological or business model transformations that major players may miss (‘Nokia experience’). Should large regional players fail, Lower Saxony can, to a lesser extent, draw on potential replacements than e.g. Baden-Württemberg with its plethora of medium-sized technological leaders. Finally, despite some promising developments in the fields of instruments, navigation, communication technology, biotechnology, and aviation, Lower Saxony still faces difficulties in attracting high-tech firms which might prove conducive in establishing genuine, self-sustaining clusters beyond the agglomeration of corporate suppliers in the vicinity of OEM production sites. •! Challenge 2: Weak intermediary landscape beyond few key centres The concentration of Lower Saxon’s innovation system on a few key players and, accordingly, a limited number of hubs for science-industry collaboration around central industrial players makes it difficult for small to medium-sized firms to participate in these efforts. As the region’s lead universities naturally turn towards large corporations that can offer substantial funding for strategic pre-competitive research, small and medium-sized enterprises often remain excluded from these exchanges. At the same time, small universities often do not yet possess sufficient capacities to support major efforts in advanced manufacturing or the awareness of which cases larger scale initiatives are actually open to SME participation. As long as this does not happen, smaller firms risk remaining locked into their local business and academic consulting networks that help them in dealing with current problems in an expeditious and competent manner – while at the same time, may keep them from developing a long term perspective. •! Challenge 3: Integrating SMEs into global value chains The region’s economy is characterised by a relatively large share of small and medium- sized firms that face a variety of challenges ranging from increasing global competition to a need to address the impending transformation of industrial production. So far, only a limited number of smaller and medium-sized firms in Lower Saxony have actively entered global markets in a self-determined manner. When they have done so, however, these activities have often proven successful. Consequently, it can be assumed that the potentials for economic success on international markets in Lower Saxony remain less than fully exploited. If they do not belong to one of the region’s major clusters, however, their interest in and hence awareness of international trends is often limited. Naturally, not all SMEs in the region should internationalise, but several success stories have shown that for some, this often not even considered option may harbour substantial benefits. Hence, the challenge is to bring them in a position to seriously consider the issue, assess the benefits that it may bring, and then make their own, informed decision.

Regional Innovation Monitor Plus 2016 2

2. Regional Innovation Performance Trends, Governance and Instru- ments Other than in other, non-leading German Länder, Lower Saxony’s R&D system is business-dominated. Nonetheless, the region’s potential in formal high-tech sectors is limited in comparison, with some exceptions in the fields of instruments, navigation, and biotechnology. While Lower Saxony is characterised by, in absolute terms, quite substantial regional research capacities, these remain concentrated on a limited number of key players and industries. While the regional innovation system remains a good way from mono-structured, some structural dependence on the automotive sector cannot be denied as it accounts for about 50% of the region’s industrial R&D capacities. In most other industries, on the contrary, the innovative performance of local firms remains below national average, even if not drastically so. Also, the below average presence of non-university public research limits options, beyond the key hotspots, the inclination to cooperate remains too limited, and the region’s participation in national or EU support schemes is too limited. Finally, recent studies clearly underline that small and medium-sized enterprises in Lower Saxony are more often ‘imitating innovators’ i.e. even when innovating, are less likely to develop market novelties than elsewhere. This is consistent with the fact that they have, on other accounts, been found to invest less in research and development than comparable firms in other German regions. A further problem highlighted in many reports past and present are the large, and in part growing, intra-regional disparities with a view to particular challenges, in particular with a view to social issues and those in the area of qualification. While some sub- regions harbour strong potentials others are faced with notable challenges which, in turn, differ from context to context. Due to demographic challenges and migration of the young and qualified, recent years have seen an increase rather than decrease of overall disparities in all areas related to population and qualification. Hence, the following key challenges can be identified: •! Challenge 1: Limited dynamic in SME development Beyond the region’s lead firms, it has proven difficult to develop a strong basis of dynamic SMEs that could help bolster cyclical weaknesses or downturns in the sectors most relevant for the region’s larger firms. If the automotive cluster were to face a structural crisis, the region as such would face severe problems. While, in relative terms, the dominance of large firms does not exceed that in less vulnerable federal states, the main issue is that the region’s SME sector’s innovative capacity is in absolute terms more limited and, in many areas, fails to reach critical mass. •! Challenge 2: Lack of strong players in public research Beyond the region's lead universities, the region’s local public research landscape is concentrated and limited to a limited number of lead projects. Structurally, the regional innovation system remains business-dominated not only in relative, but also in absolute terms. Outside the key clusters of regional expertise, strong research organisations of the Fraunhofer type are missing. In the less innovative areas of the regional economy and in less developed sub-regions, universities of applied science play a sup- portive role, which, however, needs to be further developed. •! Challenge 3: Notable intra-regional disparities in qualification In large parts of the regions, the qualification of the local workforce must, for different reasons, be considered insufficient for the requirements of a future-oriented, competitive economy. In recent years, this challenge has been intensified due to demographic effects and an increasing migration of the best qualified part of the population to the region’s centres or out of the region entirely. Other than in the area of public research capacities as such, this challenge will be difficult to counter through mere investment and requires comprehensive action.

Regional Innovation Monitor Plus 2016 3

3. Future Actions and Opportunities With regard to Advanced Manufacturing: Lightweight Production In terms of main trends in advanced manufacturing, the region is particularly affected by those aspects and challenges that stand in close relation to the automotive industry. With a view to future product development on the basis of standard combustion engines, key emphasis thus necessarily falls on lightweight production and new materials as the car of the future will have to become more energy efficient and live up to new standards of robustness and recyclability. Nonetheless, all trends related to Industry 4.0 and Smart Factories are of equal importance to the region’s main industrial players as they will affect their future production processes and the viability of their business models. If the role of large production sites changes in the course of the development of new, Industry 4.0 based value chains, Lower Saxony as a region will be among the first to be notably affected. •! Prepare the automotive cluster for the challenges of the future For decades, the automotive and mobility cluster has guaranteed economic prosperity and well-being in Lower Saxony and, in particular, some of its otherwise less developed sub-regions. Despite a much needed emphasis on diversification, there will not be any comparable replacement for this cluster in the short- to mid-term. Consequent- ly, all possible efforts should be taken to support the region’s automotive firms in preparing for the systemic transformation that will affect the mobility sector as such during the next decade. From a regional perspective, a far more dangerous scenario than the current temporary crisis of Volkswagen is that the local mobility cluster becomes caught up in a lock-in while competitors take its global position after the next technological shift. To avoid this successfully and to defend the cluster's prominent global position, will be a key and strategic task for the next decade. •! Connect firms outside the key cluster(s) to technological networks In the light of the above, however, Lower Saxony urgently needs a contingency plan for the case that the absolute contribution of the local mobility cluster to regional growth and employment at some point diminishes. With a view to the impending systemic transformation in the mobility sector the danger is real. Overall, two ways can be envisaged how the state of Lower Saxony can respond to this challenge. Firstly, with a view to this report’s headline topic of lightweight production, the region could seek to explore and regionally develop additional fields of applications for given technological strengths beyond the car industry, e.g. in aeronautics. Likewise, existing potentials in production technology could be further explored and transferred to small and medium-sized firms to a much broader extent than currently. To achieve this and establish a more robust framework of related variety, the region’s system of intermediaries needs to be strengthened at its core and further extended at its margins. •! Position firms outside the key cluster(s) in global value chains Currently, Lower Saxony has to be considered as a regional innovation system in which a few major firms, universities and major intermediaries perform an interface function to global networks of knowledge and value creation. At the same time, a large majority of smaller firms is dependent on them for access to global knowledge and international markets. With a view to the obvious benefit that diversification could bring for the region it would seem expedient to address and overcome this situation. Fortunately, some regional firms have demonstrated that business models built on a more international orientation of small and medium-sized firms can be viable and lead to economic success. Against this background, an economic policy that not only aims at the region’s major firms but at its population of small and medium-sized firms beyond them could not only improve local knowledge networks but also improve the robustness of the region’s overall position on the global market. In thematic terms, complementary support domains would likely have to be defined by networks of small actors themselves rather than by incumbent corporations or top-down by policy.

Regional Innovation Monitor Plus 2016 4

With regard to innovation policy Overall, Lower Saxon innovation policies can be considered as consequential given the nature of the federal state, even if potentially less specialised than elsewhere. First and foremost, they are based on a sound analysis of regional innovation potentials that draws on multiple studies which have, over the years, been performed by many actors, most prominently the Lower Saxony Institute for Economic Research. Secondly, they seek to consciously address the discrepancy between a limited number of globally recognised hotspots of development and a large rural periphery facing quite different opportunities and challenges. The prominent differentiation between urban and rural solutions in the innovation strategy appears logical and effective. Thirdly, they prominently take into account the region’s current areas of strength. While the main areas of intervention may not necessarily be reflected in the new array of support programmes, they will still be useful in guiding later investment decisions. •! Prepare the economy for the impending industrial transformation In the years to come, Lower Saxony’s key economic basis, the automotive sector, will be challenged from multiple directions. Even if the potential for a transformation towards electric rather than fuel powered cars does not materialise, the incumbent automotive producers, including their supplier chain, will be substantially challenged. The most obvious challenges in this regard are new advances in lightweight production as well as systemic changes resulting from the introduction of self-driving vehicles. Hence, the region’s main industrial players need to invest substantially into strategic research and concrete product development. This, however, requires a transition of corporate culture and the recognition of a need for change in business models that is, usually, not easily achieved. Hence, the state, federal and regional level alike, will have a role to play in initiating and dynamising industrial change and to empower those willing to break out of existing path dependency. •! Find ways to nurture new, emerging domains besides automotive As a consequence of impending systemic changes to the automotive industry regional economic policy needs to hedge risks resulting from the potential impact that a major shift in automotive supply chains would have for the region and create opportunities for alternative domains of excellence. The economy of Lower Saxony provides several starting points for this endeavour and past experiences have shown that regional SMEs can capitalise on new types of business opportunities both on their own and collectively. Quite obviously, the region would therefore benefit if “processes of discovery” between its latent champions could be orchestrated. All needs for action identified in the SME sector should not obscure the fact that no small number of medium-sized firms in Lower Saxony is in fact quite competitive. Moreover, the impending transition of industrial production may create new business opportunities for SMEs in the context of Industry 4.0 or additive manufacturing. •! Find new and better ways to address regional disparities The current approach towards addressing intra-regional disparities can be considered less than optimal with a view to administrative efficiency and, at the same time, somewhat at odds with the idea of supporting the creation of new supporting domains to balance concentration in the regional economy. Arguably, examples from the We- ser-Ems area and other sub-regions document that even SMEs from peripheral regions can be quite advanced technologically and from a business perspective. Hence, they could successfully engage in regional level competitions and there is no real need to delegate any part of funding decisions on innovation policy to the sub-regional level. That is not to say, however, that intra-regionally differentiated policies are per se misguided. In the field of qualification, for example, location-based approaches on the level of districts can be decisive in enabling the emergence of new domains of innovative excellence in the first place and in accompanying the growth of those already in existence (see good practice case). Thus, future economic and industrial policies could profit from a clearer reflection of the relation between certain political ends and the most appropriate territorial level of intervention in that specific context.

Regional Innovation Monitor Plus 2016 5

1.!Advanced Manufacturing: Advanced Materials

1.1!Overview of performance and trends At the end of 2014, Lower Saxony had 7.8m inhabitants, about 10% of Germany’s overall population. It is the second largest federal state (47,641km²) and sparsely pop- ulated by German standards (around 170 inhabitants per km²). The regional distribution of economic dynamics is heterogeneous, contributing to notable social disparities and considerable structural challenges. Urban areas like Hanover, Braunschweig, Göt- tingen as well as the surroundings of Hamburg are in a very different economic position than the far less dynamic areas in the east or the north-west of the state. In 2013, regional GDP was €239b, accounting for about 9% of the German total, in line with the region’s share in population. GDP per capita reached €30,149 which amounts to about 90% of the German and close to 120% of the EU28 average (€25,700). In 2013, unem- ployment (5%) was slightly below the German and notably below the EU28 (11%) average. With 24.1% in overall employment, the role of the industrial sector is largely in line with the German national average (24.7%) which, however, notably exceeds the Euro- pean average. To quite a substantial extent, the region’s industrial structure is dominated by the automotive sector, most notably the headquarters, research and development centre as well as several major production sites of the Volkswagen corporation. Beyond the more than 100,000 employees working for Volkswagen directly – most notably at the locations of Wolfsburg and Emden – a far larger number work for tier-1, tier-2 and component suppliers across the region e.g. the 40,000 working for Continental alone. Lower Saxony is home to about one tenth of all German automotive firms, employing nearly 14% of all automotive personnel, and accounting for about 20% of national turnover in the industry. In the years before the economic crisis, turnover increased by over 35% to over €70b. Other relevant fields of activity, with about 50,000 employees each, are the food industry – based on the region's strong agricultural orientation and tradition; a more SME based machine-building industry; manu- factures of metal and metal products (including Salzgitter steel) as well as smaller, yet still relevant foci of activities in the electrical equipment and chemical industry. By and large, Lower Saxon industries can be considered internationally competitive and leading in innovation. In 2013, the overall scope of regional exports amounted to €77.6b (7.1% of German total), not least based on a notable share of foreign in total sales of more than 30%. With the Volkswagen headquarters, moreover, the region is home to a key global player that, by virtue of its control of production sites worldwide, can influence the overall value chain, and secure local economic benefits without any specific goods being assembled in the region itself. Regularly, the region around Wolfsburg is statistically identified as the location with the highest intensity of business investment in research and development (BERD), as the Volkswagen Group accounts for a notable share of its R&D expenditure in this place. In terms of main trends in advanced manufacturing, the region is thus particularly affected by those aspects and challenges of advanced manufacturing that stand in close relation to the automotive industry. With a view to future product development on the basis of standard combustion engines, key emphasis will thus necessarily fall on lightweight production and new materials as the car of the future will have to become both more energy efficient as well as live up to new standards of robustness and recyclability that current materials cannot support. Nonetheless, all trends related to Industry 4.0 and Smart Factories are of equal importance to the region’s main industrial players as they will affect their future production processes and business models substantially. If the role of large production sites changes in the course of the development of new, Industry 4.0 based value chains, Lower Saxony as a region will be among the first to be notably affected. Moreover, industrial robotics, automation, intelligent control systems and mechatronics are even today common practice in many of the region’s production facilities and most of its major firms are both used to and in a good position to continuously develop them further. Consequently, Industry 4.0 and Smart Sys-

Regional Innovation Monitor Plus 2016 6

tems are on the regional government's agenda and are being addressed through specific support lines and industrial networks. Moreover, the region features a number of key competences in laser technology that have been developed for a number of years and may yet become crucial for future ave- nues in additive manufacturing and nanotechnology. Since its foundation in the mid- 1980s, the Laser Zentrum Hannover stands for innovative research, development and consulting, that in technical terms, match that of other key locations within Germany, such as those in Aachen. Currently, its applied research in photonics focuses on optical components and systems, optical production technologies (additive manufacturing) and biomedical photonics. Unsurprisingly, the maintenance and expansion of these notable local competences have and will continue to receive substantial attention by the regional government. Taking all that into account, this report has decided to focus on lightweight production not only because it constitutes a specific key challenge to the region’s specific sectoral profile in the automotive sector but also because it has become a key focus of public investment into nationally and internationally visible projects in recent years and thus constitutes one of the most relevant current trends. Arguably, the challenges related to Industry 4.0 and the impending networked economy are more daunting for the Ger- man SME sector and will therefore be addressed in regional reports dealing with regions for which small to medium-sized firms are more constitutive. For Lower Saxony, in contrast, the resolution of key challenges in lightweight production may well turn out to be indispensable for the future viability of Lower Saxony’s key industrial players’ product strategy or even general business model.

1.2!Business sector perspective As outlined above, the Lower Saxon industrial sector is characterised, even dominated by a few large, internationally leading firms and their comprehensive local supplier ecosystems – without which the regional economy would be facing severe economic difficulties. Quite untypically for Germany, employment in firms with more than 250 employees accounted for more than 42% of overall employment in 2012. That is not to say, however, that the technological activities of small and medium-sized firms would not matter for the local economy or even its export performance. Beyond the key industrial hotspots, the Lower Saxon industry features various additional niche competences in e.g. the development of special vehicles and machinery for agriculture or wind turbines which – quite independent from the region’s main industrial foci – have a global reputation in their own right. As is the case in many German regions, a large share of Lower Saxon industrial companies is formally assigned to ‘traditional’ medium-technology industries such as vehicle production, machine-building or classical electronics. Nonetheless, both their products and production processes feature a notable share of embedded high-tech components that make them internationally recognised high-tech firms. Despite the concentration of capacities in a more limited number of firms, therefore, Lower Saxony is one of the key locations for advanced manufacturing in Germany, alongside lead regions like Baden-Württemberg and Bavaria. In particular, key competences can be identified in the areas of •! Mobility, including automotive engineering, shipbuilding, and aviation; •! Food, including breeding, food production, food safety, and agricultural technology; •! Maritime economy; •! Energy systems, including wind energy, mining and drilling technology; •! Life science; as well as •! New materials and production technology.

Regional Innovation Monitor Plus 2016 7

In Lower Saxony, the regional R&D sector is business-oriented with overall business R&D expenditure amounting to €4.75b, or 67.8% of all expenditures in 2013. In the same year, about 8% of all German business R&D personnel were employed in the region (28,769 FTE), 61.0% of the regional total in R&D (47,181 FTE). Nonetheless, and despite the large corporate concentration in the automotive sector, the number of EPO patent applications per 1,000 inhabitants remains notably below the German average (179.5 vs. 283.5 in 20101).2 In line with this, prior studies suggest that the overall R&D intensity of manufacturing outside the key corporation of the mobility cluster remains rather low and the development and start-up of genuine high-tech firms alongside the main incumbents in traditional, mid-tech industries must be considered unsatisfactory. By and large, smaller manufacturing firms continue to under-invest in innovation and the lack of urban centres makes the region less than susceptible to a high-tech start-up culture drawing on venture capital. Overall, however, the recent economic and financial crisis has not caused major fric- tions in the Lower Saxon economy. As many of the German car industry’s key export markets in Asia, notably China, recovered rather quickly a substantial downturn in sales in the region's key industries could be successfully prevented. Nonetheless, growth rates in the automotive sector that – during the early 2000s – had been rather astronomic, could not be fully maintained. At the height of the crisis, the regional government chose to support small and medium-sized firms with additional capital and through silent partnerships as many displayed a certain reluctance to reinvest with order books only half filled. Hence, the impact of the financial crisis had thus been mastered more or less successfully by 2010/11 (Error! Reference source not found.), in line with the national trend and without any long-term consequences for growth and employment. In the first years following the crisis, Lower Saxony even displayed above average growth rates. More recently, however, regional growth has been lagging behind the nations lead regions by nearly one percentage point and may be further affected by the recent turbulences in and around the Volkswagen Group. Figure 1: Economic Growth in Lower Saxony 2000-2014

Source: NORD/LB, 2015 Due to their global nature, Lower Saxon firms have been engaged in a number of clusters and other initiatives and – through them – in international exchanges in the respective fields. Also, many have international subsidiaries in other countries that keep them in constant contact with different countries’ industrial and regulatory environ- ments both within and outside of Europe. In principle, those Lower Saxon firms that actively scout for and engage in international exchanges tend to consider themselves

1 Newest reliable values, 2011 and 2012 figures are available but not reliable 2 Figures: http://ec.europa.eu/eurostat/de/data/database, last accessed on17/11/15

Regional Innovation Monitor Plus 2016 8

leaders in their industries and seek to cooperate with other globally relevant players on eye-level. As mentioned above, Lower Saxony is somewhat less than a seedbed for high-tech start-ups by German standards. Moreover, the relative geographical closeness of two of the nation’s main centres in this regard, Berlin and Hamburg, makes it even less likely that innovative start-ups will be set up in Lower Saxony, outside the reach of venture capitalists and business angels. A relevant exception from this rule, however, can be technology spin-offs of the region's major technological universities, yet their overall number remains limited. As opposed to the nation's leading universities e.g. TUHH Hamburg-Harburg, TU Dresden or TU München, none of Lower Saxony’s major universities have established a central holding company to structurally further and coordinate such efforts. In the specific field under study in this report, finally, small to medium-sized firms or start-ups play a comparatively limited coordinating role, as lightweight production constitutes a challenge at the core of final producers’ business model which must be addressed directly by them, rather than by external actors from further down the value chain. Table 1: The most important industrial branches in Lower Saxony, 2013*

Industry Employees Turnover € m Vehicle Construction 136,989 77,952 Food Industry 64,803 29,573 Machine Building 58,170 12,380 Rubber and Plastics 43,918 8,661 Metal Products 39,532 7,123 Industry total 515,351 186,889 Source: Lower Saxony Ministry of Economic Affairs, Regional Statistical Office; * latest figures available Table 2: Export quotas in Lower Saxon industries, 2013*

Industry Export rate Chemical industry 61.9% Machine building 57.6% ICT industry 53.3% Pharmaceuticals 48.3% Overall average 44.8% Source: Lower Saxony Ministry of Economic Affairs, Regional Statistical Office; * latest figures available

The largest industrial firms in Lower Saxony include: •! Volkswagen AG, Wolfsburg, € 59,666 m (turnover), 549,763 (employment), automotive; •! Volkswagen AG, Wolfsburg, € 18,417m, 101,794, automotive; •! Continental AG, Hanover, € 9,417m, 17,463, automotive (tyres); •! ContiTech AG, Hanover, € 2,038m, 28,210, automotive (tyres); •! Salzgitter AG, Salzgitter, € 1,600m, 25,541, iron and steel; •! Nordzucker AG, Braunschweig, € 679m, 3,290, food industry; •! Nordzucker AG Braunschweig, € 274m, 1,128, food industry; •! Faurecia Automotive GmbH, Stadthagen, € 636m, 11,345, automotive (supplier); •! Georgsmarienhütte Holding, Georgsmarienhütte, €578m, 10,746, iron and steel; •! Solvay Germany (Group), Hanover,€ 348m, 3,032, chemical industry; •! Johnson Controls, Hanover, €337m, 3,046, automotive (batteries). Source: NORD/LB, 2014

Regional Innovation Monitor Plus 2016 9

1.3!Scientific research potential Lower Saxony features a multi-faceted public research landscape, with 14 universities, 16 universities of applied sciences, and nine universities of cooperative education. According to recent reports, there were 191,215 students in Lower Saxony during the 2014/15 academic year.3 In addition to this broad range of higher education institutions, Lower Saxony is home to seven Max Planck institutes, three Fraunhofer institutes, one institute of the Helmholtz Association, six institutes of the Leibniz Associa- tion, seven thematically oriented federal institutes, and 15 regional research institutes. Furthermore, there are seven institutes that are closely connected with, but legally independent from, universities. Of particular relevance for research in fields relevant for advanced manufacturing are the region’s main technical universities, two of which – the TU Braunschweig and the Leibniz Universität Hannover – belong to the “TU9”, Germany’s elite group of technical universities, or, as they themselves describe it “Institutes of Technology”. Fur- thermore, the TU Clausthal-Zellerfeld has a nationwide reputation in many fields relevant for advanced manufacturing, notably with mining-related applications. A few years ago, efforts were made to strategically coordinate their efforts within a Lower Saxony Institute of Technology (Niedersächsische Technische Hochschule), yet, for various reasons, these did not really come to fruition. In detail, the two lead universities can be introduced as follows: TU Braunschweig The university provides its students with research and teaching in 124 institutes and departments. It links core competences in engineering and natural sciences to economics, social sciences, the humanities and education. Beyond the university itself, students benefit from the proximity of first-rate research institutions in the region such as the German Aerospace Centre (DLR) in Braunschweig and from a wide range of cooperation agreements with industry. Research with relevance for advanced manufacturing is performed in interdisciplinary centres and competence networks in the fields of automotive engineering, aerospace technology, systems biology, and pharma- ceutical process engineering. Each of these centres has close ties to at least one external research institution as well as to companies in the region. Through, among others, its Institute for Machine Tools and Production Technology (IWF) the TU Braun- schweig makes key contributions to advances in manufacturing worldwide. Among other projects, the institute is involved in the Research Campus initiative Open Hybrid LabFactory that will in a later section be introduced in more detail. Leibniz Universität Hannover The Leibniz Universität Hannover is the second largest university in Lower Saxony with a large number of full-time and part-time degree programmes in engineering. In research, it is known for its leading role in physics, biomedical engineering and, most important for advanced manufacturing, production technology. Also, cross-faculty research centres represent interdisciplinary research of which the Hanover Centre of Mechatronics, and the Centre for Solid State Chemistry and New Materials are of particular relevance in the field of advanced manufacturing and new materials. Attached to six institutes of the university, the Hanover Centre for Production Technology is one of Germany’s most important research centres for production engineering (see below). Further, the Hanover Centre of Mechatronics (MZH) is an interdisciplinary research centre of the Leibniz Universität Hannover. Funded by 14 institutes of the Faculties of Electrical Engineering and Computer Science as well as of Mechanical Engineering with more than 370 researchers, the MZH concentrates core competences in research and education and develops new applications together with business partners. The Faculty of Mechanical Engineering at the Leibniz University of Hanover; currently consists of 17 institutes offering education to 2,695 students.

3 http://www.noz.de/lokales/osnabrueck/artikel/600533/erstmals-uber-190-000-studierende-in- niedersachsen

Regional Innovation Monitor Plus 2016 10

With €41.2m of funding from the German Research Council (DFG), it occupies the fourth rank nationally right behind the renowned RWTH Aachen, TU Darmstadt and the University of Erlangen-Nuremberg. Beyond the key universities, Lower Saxony is home to a number of industry oriented research organisations such as parts of the Fraunhofer Institute for Surface Engineer- ing and Thin Films in Braunschweig and Göttingen, for Manufacturing Technology and Advanced Materials in Stade as well as some other smaller ones.

1.4!Role of intermediary institutions Beyond the usual technology transfer, patent promotion and spin-off support offices at universities and selected research organisations, the Lower Saxon government supports various regional networks in a number of areas related to advanced manufacturing, among them: The Automotive Cluster Hanover-Braunschweig-Göttingen-Wolfsburg The cluster was founded in 2011 in order to interlink the skills of suppliers and to further strengthen the business location. Along the value chain, it brings together both small and medium-sized companies as well as globally acting system suppliers. It connects regional players and stakeholders, promotes exchanges and offers support for the identification of future business fields. Hamburg Aviation (National Leading-edge Cluster) The foundations for the cluster were laid in 2001 with the Hamburg Aviation Initia- tive. In 2008, Hamburg Aviation won the Leading-Edge Cluster competition organised by the Federal Ministry of Education and Research and in 2014, received the EU Gold Label for Cluster Management Excellence. Today, it networks research and industry, bringing to market high-quality products and services in the field of aviation, involving multiple actors from Lower Saxony, close to Hamburg. Niedersachsen-Aviation.NET Niedersachsen-Aviation was formed to connect aerospace companies and provide a platform for exchange, cooperation and information. Its activities focus on a website to support matchmaking in the region’s aerospace industry. The objective is to provide an easy to use database with information about companies and competencies along the value chain, accessible to decision makers on all levels. CFK Valley e. V. The CFK Valley is a world-leading network of excellence for the entire fibre reinforced composite value chain with more than 100 local, national and international members. It was founded more than 10 years ago, based on the initiative of the locally-based Airbus Group. It supports matchmaking and concrete joint development activities between its members who cover the entire value chain of high-performance fibre- reinforced composites. In 2013, it was a founding member of Composites Germany and has subsidiaries in Belgium and Japan. The Network Industry 4.0 in Lower Saxony Since mid-2015, the office of the network Industry 4.0 is located at the Innovation Centre Lower Saxony (see below) and serves as a single point of contact for all regional firms interested in the issue or confronted with challenges in that field. In the coming years a platform shall be established based on regular joint events and support for joint applications for funding from related tenders. Regional Initiative Nano- and Material Innovations The association sees itself as a communication platform enabling representatives from industry and science to form systemic partnerships, generate shared ideas and innovative products. One of its central ambitions is to increase efficiency, optimise costs and preserve resources in local small and medium-sized firms. Services provided include project support, grants management, marketing and networking, as well as initial and continuing education.

Regional Innovation Monitor Plus 2016 11

In many of those initiatives, in particular those in the automotive and aviation field, the thematic area lightweight production plays a major role, either as a long-time constitutive element of their activities (as in aeronautics) or a new, dynamically emerging trend (as in the automotive sector). In summary, the regional government on the one hand openly acknowledges that the number of relevant and effective cluster organisations in Lower Saxony remains rather low by German standards and the overall landscape of intermediaries therefore is considered unsatisfactory. Consequently, the setup and extension of networks and clusters is considered a priority and additional funding has been earmarked for this purpose in the 2014-17 support period (see below). On the other hand, science-industry collaboration in the region successfully relies on a well-established exchange between the region’s firms and major, cooperative hubs of research for advanced manufacturing which have in part been in operation for more than a decade. Prominent examples include: •! The Laser Centre Hanover (LZH); •! The Hanover Centre for Production Technology (PZH); •! The Automotive Research Centre in Braunschweig and Wolfsburg (NFF). Any one of these organisations involves numerous regional university institutes in relevant fields and provides services for local, national and, occasionally, international clients from industry. In separate organisations, they bundle local competences in an interdisciplinary and inter-organisational manner and help to transfer knowledge between them and from them to local industries. Next to all noteworthy players in the local advanced manufacturing system are connected to one of these institutions. In conclusion, the Lower Saxon innovation system advanced manufacturing can be characterised by a dense, if not complete network between the regions central players. For its many small and medium-sized firms, on the contrary, the situation is less clear. With an overall limited number of effective networks and clusters, those in particular outside of the urban-industrial centres may remain somewhat disconnected.

CFK Valley e.V. (Stade, Environs of Hamburg)

Source: CFK Valley The CFK Valley e.V. is an established European-wide competence network for carbon fibre reinforced plastics (CFRP, CFK in German), involving more than 100 world-class firms, research facilities and universities, many of them with a strong presence in Lower Saxony. The association operates as a self-financing business operation, employing a team of more than 5 facilitators and several renowned external advisers. While the original driver for its setup was local Airbus factory for CFRP-based vertical stabilizers for airplanes, the CFK Valley’s activities have in recent years been expanded into further application areas including commer- cial vehicles, wind energy, and construction. The cluster’s aim is to leverage the local concentration of CFRP competence to not only develop a broad range of innovative products but also to launch them in as many promising markets as possible, from both a country and sectoral perspective. In the research centre CFK NORD, the CFK Valley e.V. brings together between 150 and 200 engineers from the world’s key players in CFRP lightweight technology to conduct market-oriented collaboration projects in joint experimental lab facilities whose initial setup was notably co-financed from ERDF sources. What, for a different set of technologies is still planned in the Open Hybrid LabFactory (see below) has thus already been achieved in Stade for a number of years. Beyond this core facility, the CFK Valley serves its members as a cooperation platform through which partners can match their interests and capabilities in regular meet- ings and see their strategies and project ideas communicated to policy makers through either their own or the cluster management’s participation in high-level committees and conferences. Since 2003, the CFK Valley bears the quality seal "Member of kompetenznetze.de". While it did not as such win the “Leading- Edge Cluster” label it cooperates closely with the “Hamburg Aviation Cluster” that did and will soon become a key stakeholder in the Open Hybrid LabFactory.

Regional Innovation Monitor Plus 2016 12

1.5!Developing skills for the future As outlined above, many advanced manufacturing related skills in Lower Saxony are created in the major cooperative hubs of research in which university institutes are either involved as stakeholders or – at least – as partners. Many of the major centres either offer interdisciplinary courses and teaching modules directly or at least involve bachelor, master and PhD students in their work on a systematic and regular basis, thus providing the foundation for a practice oriented curriculum and first, robust contacts with future employers from within the regional industry and beyond. For example, approximately 400 mechanical engineering students at the Leibniz Uni- versity of Hanover not only attend seminars at PZH but also contribute to research activities. They gain experience with research projects, help with the organization of symposia and the preparation of industry contacts. With their project-related and praxis-oriented student research papers, bachelor's and master's theses, they contribute to the advancement in their field of study, discover the various research areas first- hand and develop their academic interests and strengths. Likewise, the LZH offers a number of laser specific lectures and seminars for students of Lower Saxon universities and universities of applied sciences. Currently, 10 different lectures and seminars, both basic and applied, are on offer. Students who visit at least two of those subse- quently or in parallel received the LZH laser certificate which has gained some recognition. Indirectly, these activities are funded by the basic funding components of the Leibniz University Hanover and the LZH itself which are provided on a continuous basis by the regional government. In the context of the Automotive Research Centre NFF, the TU Braunschweig has developed the GEENI graduate programme, specifically funded by the Lower Saxony Ministry of Science and Culture, it is dedicated to an- swering the interdisciplinary question of how mobility can be achieved without the use of fossil fuels. More specifically, GEENI seeks to increase the understanding of the processes in lithium batteries through new, or enhanced, preparation, analytical, and numerical methods to deliver an adequate solution to the existing mobility problem. Beyond that, the region’s various universities of applied science play a substantial role in providing practically-oriented, engineering-related courses of study whose gradu- ates are in strong demand among local firms. Furthermore, the RIS3 strategy foresees a specific field of expenditure “upgrading of skilled personnel for innovation” for which a total annual budget of about €17m is earmarked from 2014 to 2017. With a view to the overall process of demographic change affecting the region’s small and medium-sized firms, the “Initiative for Skilled Employees Lower Saxony” („Fach- kräfteinitiative Niedersachsen”) has been launched. It addresses several different thematic fields, among them the integration of the so far unemployed, support for regional initiatives and new projects in dual education. A further focus is put on continuing education in the programmes “continuing education in Lower Saxony” (WiN) which is a continuation of two programmes pursued in the 2007-12 period, “individual continuing education in Lower Saxony” and “continuing education for SMEs”. Typically, these will be financed through the ESF which, however, is not an issue as Lower Saxo- ny has developed a multi-fund operational programme. In general related support is provided to chambers of commerce, social partners as well as further associations that are already active in dual education, lifelong learning and training on the job. In the regional initiatives, these – together with local enterprises – take a new, place-based approach towards matching the need of local firms and the type of qualification available in the local workforce. Support measures like WiN address primarily those small and medium-sized firms that need improved access to high-quality training and further education measures that are available on the market, yet typically either too expensive or not sufficiently taken note of in times of economic boom and pressing everyday business. Typically, the firms’ owners or stakeholders are exempt from this support measures. For very small companies, however, exceptions have been defined. During the 2007-13 period the programmes' two precursors had demonstrated that this bottleneck can be successfully widened through targeted incentives.

Regional Innovation Monitor Plus 2016 13

Importantly, the new support period will not only emphasis a stronger focus on more place-based, regionally specific measures but also on key, cross-cutting areas of further education as defined by the regional government as well as on model projects and innovative approaches addressing joint needs in several firms. In this context, issues related to new trends in advanced manufacturing will inevitably be taken up as soon as they become practically relevant on the shop floor. The selection of individual projects and initiatives for support is conducted by the NBank on the basis of scoring-models. Relevant criteria include the match of the projects with the actual local needs for further education and training in different parts of Lower Saxony as well as the cross-cutting topics defined in the regional RIS3 strategy (see below). Furthermore, they have to be aligned with the activities of the region’s eight regional qualification alliances (Fachkräftebündnisse), which, in turn, are formed by regional chambers, regional economic development agencies and regional social partners in order to address qualification issues in a place-based manner. These are supported with a total of €26m over the next support period.

1.6!Major investment projects First and foremost, a list of major investment projects in Lower Saxony must refer to investments on the side of the business sector, most notably the Volkswagen Group. Over the years, its research and development facilities in Wolfsburg have been expanded and constantly kept at the newest technological edge. Basic research and development of technologies for many of the group’s models are performed at the Wolfs- burg site. In a public-private-partnership with the municipality of Wolfsburg, the Wolfsburg AG, it has also been actively engaged in the broader development of the community around it, actively promoting a positive image of automotive manufacturing, contributing to economic development and engaging in educational initiatives to promote lifelong learning for children, juveniles and adults. Other than many other German regions Lower Saxony has not seen notable investments in institutes of Fraunhofer, the Helmholtz and Leibniz Associations or any of their centres or clusters. Consequently, the high regional share of investment in non- university sector public research that can be found in a number of other German regions is not characteristic for Lower Saxony. An exception from this rule is the German Aerospace Centre that – based on federal and regional funding – invested quite substantially in its facilities in and around Braunschweig.

Source: DLR The German Aerospace Centre (DLR) in Braunschweig does research in the fields of aeronautics, transport, space and energy. Located at a “research airport”, DLR continues a tradition begun in 1936 and employs around 1,100 highly-qualified scientists and engineers. High-performance facilities, research flight and automotive vehicles, flight simulators, air traffic simulation facilities, wind tunnels, and test stands for rotors, material and noise tests are available for experimental research in the service of industry. Test equipment is designed and manufactured on site by the dedicated “DLR Engineering Systems House”. Among other activities, DLR consults users in the application of composite fibre technologies and new materials in industry. Areas of research include: dynamic aircraft behaviour and the operational safety of aircraft and helicopters, performance, safety and reliability of air, road and railway traffic, intelligent assistance systems for human operators of airborne and ground transportation systems, development of design princi- ples and tools for low-drag and quiet air vehicles, development and realization of adaptable, damage- tolerant and cost-efficient high-performance structures for aerospace and ground transportation application. DLR Braunschweig cooperates with TU Braunschweig, other research establishments and in networks such as Research Airport.

Regional Innovation Monitor Plus 2016 14

If the regional government does invest in major research and development efforts, it usually does so at the state’s leading technological universities in Hanover, Braun- schweig, Clausthal or Göttingen. Additionally, investments are common at the many regional universities of applied sciences but less commonly of a leading-edge nature. In recent years, the Lower Saxon government has quite commonly co-invested in public-private endeavours that are otherwise financed by industry or other, in principle autonomous, public actors such as universities or research institutions. Over the years, the Lower Saxon government has invested substantially in world standard advanced manufacturing facilities, even when today’s common practice process technologies were still at the stage of scientific solution early technological development (e.g. lasers). Over the past decades, therefore, a number of high-level investment projects in areas relevant for industrial production have been realised in Lower Saxony building on key capacities of local universities on the one hand and specific demands of local industries on the other. In the following, three of the most prominent will be introduced in some more detail. The most recent investment project, the Open Hybrid LabFactory driven by the Volkswagen Group, the federal government and the Land of Lower Saxony will be illustrated in detail as a case of good practice in a subsequent section.

Hanover Centre for Production Technology (PZH)

Source: PZH The Hanover Centre for Production Technology (PZH) is, nationwide and internationally, one of the most important research centres for production engineering. Approximately 240 scientists, mostly with engineering and natural sciences backgrounds, work at six university institutes which together have formed the PZH. Under its umbrella, they come together for a successful interdisciplinary cooperation drawing on specific engineering consulting services. Apart from pure research, and numerous research collaborations with industrial partners, the PZH provides students with high quality, praxis-oriented education, in particular, the degree programme "Production and Logistics". Approximately 800 mechanical engineering undergrad- uates participate in various hands-on courses; appointed as student research assistants of which about 450 are actively involved in research projects. Very recently, it was decided that the federally supported Compe- tence Centre Industry 4.0 in SMEs with a mandate for Lower Saxony, Hamburg and Bremen will be hosted at the PZH.

Laser Zentrum Hannover e.V. (LZH)

Source: LZH For 28 years, the Laser Zentrum Hannover e.V. (LZH) has been committed to advancing laser technology. Supported by the Lower Saxony Ministry for Economics, Labour and Transport, the LZH has been devoted to the promotion of applied research in the field of laser technology. Its main tasks are research, development, consulting as well as training and education in photonics and laser technology, with a research focus on optical components and systems, optical production technologies, and biomedical photonics. Many of the centre’s research projects aim at current and future demands of local and national businesses. Apart from such a cooperative technology transfer, the LZH aims at “knowledge transfer through minds”, building up a comprehensive network among different industries and so far has produced seventeen successful spin-offs. Over the years, approximately 500 jobs have thus been created. Scientists who decide to go on on their own can “grow out” of the institute, by renting rooms and laboratories from the LZH during their start-up phase.

When they need larger facilities, they move to their own buildings, often in close proximity.

Regional Innovation Monitor Plus 2016 15

, Automotive Research Centre Lower Saxony (NFF)

Source: NFF Supported by Lower Saxony’s government and Volkswagen AG, the NFF was founded as an interdisciplinary research centre in 2007 to establish Braunschweig as the leading location for internationally renowned automotive research. It is the basis for effective cooperation between science and industry and their research, which was further enhanced by the opening of the branch in Wolfsburg (MobileLifeCampus) at the beginning of 2009. Three of its 12 member departments are located here. Another branch is at the Braun- schweig research airport. The NFF focuses on promising topics in automotive research. The fields of research – worked on by interdisciplinary research teams and managed by NFF project managers – include: "Intelligent Vehicles", "Low-Emission Vehicles", "Flexible Vehicle Concepts", and "Conditions and Concepts of Mobility". The research programme of the Automotive Research Centre Niedersachsen is based on the idea of a “Metropolitan Car” and focuses on the development of future, vehicle-related technologies and usage models to sustainably meet the individual mobility requirements in urban centres.

1.7!International cooperation As mentioned above, most of Lower Saxony’s key hubs of science-industry cooperation are part of long-standing, well-established international networks in their respective fields. Due to their excellence and consequent global visibility, research results produced in them are known and discussed in international scientific fora. Likewise, it goes without saying that Lower Saxony’s key industrial enterprises like Volkswagen or Continental are not only well connected players within international value chains but – through the functions of the local headquarters – exert a notable, strategic influence on the development and design of such. Overall, most of the region’s larger players, be they universities, public research organisations or companies, face few obstacles or difficulties in the interaction with international partners or at least, in many years of practice, have developed ways to overcome these professionally. Many small and medium-sized firms, however, face strong difficulties in facing challenges brought about by international market developments and in participating in international knowledge flows. Thus, substantial innovation potential in the region has in the past remained untapped. Consequently, Lower Saxony’s RIS3 strategy puts specific emphasis on support for the development of international cooperations in small and medium-sized as well as handicraft firms. Moreover, obvious cooperation potentials with e.g. the Netherlands shall be actively addressed in the coming years. So far, however, neither Lower Saxony as a region nor any of its local key players are active participants or drivers of European level advanced manufacturing initiatives like EFFRA or factories of the future. In general, the government of Lower Saxony is less active than others when it comes to substantial, structurally set up international collaboration. That notwithstanding, it pursues a number of activities when it comes to international fair visits and the organisation of delegation visits4 and maintains a number of foreign representations to support internationalising firms, in particular SMEs, in a number of relevant partner countries5. Concerning inter-regional cooperation at the political level, the Land of Lower Saxony was and remains a partner in a number of cross-border and transnational operational

4http://www.mw.niedersachsen.de/portal/live.php?navigation_id=5515&article_id=16039&_psmand=18 5http://www.mw.niedersachsen.de/startseite/themen/wirtschaft/aussenwirtschaft/auslandsvertretungen/ niedersaechsische-auslandsvertretungen-120249.html

Regional Innovation Monitor Plus 2016 16

programmes as well as remaining constantly challenged by the task of aligning its policies with that of the bordering and nested city states of Hamburg and Bremen. In this context, several inter-regional activities have been set up, also in cooperation with the Netherlands (e.g. through the INTERREG IV A-Programme Germany – Netherlands 2007-2013). In 2014, the extension of the INTERREG-Programme Germany – Netherlands was approved for the period 2014-2020, covering a total of €440m in planned allocations to 15 programme partners from the Netherlands, Lower Saxony and North Rhine- Westphalia. The programme focuses on an increase of cross-border economic strength through promoting business R&I and the development of linkages and synergies between companies, R&I centres and higher education, promoting research, innovation and implementation in the field of CO2-reducing technologies and on strengthening social and cultural cohesion through the promotion of legal and administrative cooperation and cooperation between citizens and institutions. Thematic focus areas include agribusiness / food, health & life sciences, high tech systems and materials (HTSM), logistics, and energy/CO2-reduction.

1.8!Good practice case: LeichtbauCampus Open Hybrid LabFactory The public-private-partnership “Open Hybrid LabFactory” was initiated by the Nie- dersächsisches Forschungszentrum Fahrzeugtechnik (NFF) of the TU Braunschweig and Volkswagen in Wolfsburg in 2012, after the project proposal by the same name had been selected as one of 10 "Research Campus" projects in a national competition for funding. Since, the “Open Hybrid LabFactory” has been funded by the Federal Ministry of Education and Research and the Land of Lower Saxony as well as a variety of industry partners, most prominently Volkswagen. The partnership’s mission is based on the three main pillars of integrating the expertise of scientific and industrial research in an open factory (“open”), democratising lightweight construction by the use of hybrid composite structures made of plastics, metal and load-path-optimised textile structures (“hybrid”), and the ambition to unite the world’s leading technology companies and top level research along the process chain at one single, joint site in Wolfsburg (“LabFactory”). In the research factory, long-term, strategic cooperations between industrial and scientific partners will be established and joint project work will take place under “a single roof” – in particular in the field of pre-competitive, application-oriented research. Thematically, the Open Hybrid LabFactory’s partners cooperate in the development of ecologically and economically sustainable manufacturing and production technologies for hybrid lightweight components suitable for mass production. They cover the entire value chain from carbon fibre development and production to hybrid production processes for producing functional components through to their recycling. All process steps are represented by global technology leaders, whose expertise shall be combined through their sharing of joint facilities in the LabFactory. Thus, the initiative’s ambition is to increase synergies along the process chain by accessing new potentials in the areas of material development and in economic lightweight production. Main research areas include sustainable fibre production, process and component development, and the development of integrated production technologies. In terms of research priorities, the partners of the Open Hybrid LabFactory develop manufacturing technologies for economically and environmentally sustainable production of hybrid lightweight components made of metals, plastics and textile structures – with the ambition to make them suitable for mass production. More precisely, one core ambition lies in the development of a low-cost automotive carbon fibre, and increase of energy efficiency in the production of such fibres, the development of different energy usage scenarios for energy intensive production processes and the manufacturing of carbon fibres based on new precursors.

Regional Innovation Monitor Plus 2016 17

Figure 2: Open Hybrid LabFactory Thematic Focus

Source: Open Hybrid LabFactory e.V. In late May 2013, an association “Open Hybrid LabFactory e.V.” was formally set up and listed in the local company register. Its planned physical facilities are located not far of the main plants of the Volkswagen AG, directly adjacent to the MobileLifeCam- pus. Its mission, within this larger framework, is to establish new competences and research for economic lightweight construction, innovative materials and production technology in Wolfsburg. From its inception, the association was based on the joint commitment of three major partners, the original applicants NFF, TU Braun- schweig and Volkswagen as well as Fraunhofer. Even though it was not a full party to the initial proposal Fraunhofer was involved in discussions right from the moment of the proposals selection by the federal ministry. As three institutes (Fraunhofer IFAM, Fraunhofer IWU, Fraunhofer WKI) expressed strong and relevant interest in participating, Fraunhofer decided to set up a joint “Pro- ject Centre for Lightweight Construction” in Wolfsburg to manage and coordinate its involvement in the Open Hybrid LabFactory. Currently, the centre is led by one general manager from Fraunhofer IFAM who works on this task full time. Additionally, two researchers from Fraunhofer IWU have started to work in Wolfsburg permanently, regularly joined by a number of additional researchers who come to the facilities temporarily for project work. With the opening of the Open Hybrid LabFactory’s main building, their number is envisaged to rise to 10, in the mid-to long term to 50. In line with this, the management team may eventually be expanded to more than one general manager. With a view to additional stakeholders, the association is based on three different types of memberships with different rights and obligations, full or premium membership, project membership and associate membership.

Regional Innovation Monitor Plus 2016 18

Figure 3: Members of the Open Hybrid LabFactory

Source: Open Hybrid LabFactory e.V. The main themes of the “Open Hybrid LabFactory” are selected, driven and further developed largely by its 10 full members, of which eight are from industry and two from science. These also contribute the lion’s share of the funds to purchase technology and infrastructure facilities. These full members of the association are: TU Braunschweig, Fraunhofer, BASF SE, DowAksa Advanced Composites Holdings, Engel GmbH Germany, IAV GmbH, Magna AG, Siempelkamp GmbH, ThyssenKrupp Europe AG and, of course, the projects initial driver, the Volkswagen AG. With its full members, the association seeks to establish framework agreements on how much they will contribute to projects on an annual basis. The association’s project members that less actively contribute to its overall strategy but still play substantial roles in many of its projects are: Cetex gGmbH Institute for Textile and Processing Machines, data M Sheet Metal Solutions GmbH, German Aero- space Centre, DREISTERN GmbH & Co. KG, EDAG Engineering GmbH, IFF GmbH, ifu Institute for Environmental computer science Hamburg GmbH, Institute of Poly- mer Materials and Polymer Technology, TU Clausthal, INVENT GmbH, iPoint- systems GmbH, Schmalz, KARL MAYER textile machines, Karosseriewerke Dresden GmbH, Leibniz Universität Hannover, Lightweight Structures Engineering GmbH, Salzgitter Mannesmann Forschung GmbH. As can be easily seen, the association thus involves a large majority of all relevant players in Lower Saxony’s industrial innovation system (and beyond). Reflecting the interests of its key partners, its advisory council is composed of: one member representing the Technical University of Braunschweig; one member representing the Volkswagen AG; one member seconded by each other full member; and two members elected by the general assembly, proposed by the project members. The association itself is led by a board of four experienced managers: •! Chairman: Univ.-Prof. Dr.-Ing. Prof. hc Klaus Dilger (TU Braunschweig, IFS); •! Chairman: Dr. Armin Plath (Volkswagen AG); •! Univ.-Prof. Dr.-Ing. Klaus Dröder (TU Braunschweig, IWF); •! Univ.-Prof. Dr.-Ing. Thomas Vietor (TU Braunschweig, IK); whose activities are coordinated by a management office with a staff of three. Wherever thematically relevant, the OpenHybridLabFactory exchanges information and enters into dialogue with other lightweight clusters in the region and beyond, among them the CFK Valley as well as the Arena 2036 in Stuttgart. Overall, it is planned that these more than 30 partners will in the mid-term assign more than 200 researchers and engineers to projects in the LabFactory, about 100 of which will be coming from TU Braunschweig, 50 from the Fraunhofer Project Centre and a further 50 from industry. Additionally, 150 students shall be working on site.

Regional Innovation Monitor Plus 2016 19

According to the initiative’s management this target is to be achieved and is achievable within five years. Even more, the potential volume of projects between all partners involved is considered substantially higher than what can eventually be accommodat- ed in the Open Hybrid LabFactory building. Figure 4: New Building of the Open Hybrid LabFactory

Source: Open Hybrid LabFactory e.V. The building of the Open Hybrid LabFactory’s is financed by the Wolfsburg AG, a public-private-partnership between the Volkswagen AG and the municipality of Wolfsburg (see above). At a total cost of about €30m the LabFactory building was set up by Volkswagen Real Estate as general contractor on a lot of 10,000 m² with total office and lab space amounting to 9,400 m². Most construction efforts began in December 2014 and final work, including the installation of basic large-scale apparatus and equipment (forming presses, test stands, etc.) is going to be completed in late summer 2016. Once the facilities are fully operational, they will include test centres, warehouses, workshops, and recycling facilities. Installations include textile weaving machines, preform-centres for flexible prefabrication, hybrid forming presses, multifunctional extruders, hybrid injection moulding presses, laboratory presses, hybrid profile forming machines and recycling facilities. Installed and operated together in one facility, they allow for the combination of the forming process and injection moulding and the production of novel hybrid lightweight components. The basic physical framework i.e. buildings in which a certain type of equipment can safely be operated are currently being constructed, to no small degree paid for by public funds. In parallel, planning for the installation of actual equipment, machines and apparatus is ongoing. To a certain extent, the process of the opening of the Open Hy- brid LabFactory’s facilities will thus be a gradual one consisting of starting new, large- scale undertakings at the new site directly while at the same time moving existing, well-prepared projects there from other locations. With a large number of ideas and preparatory projects in the pipeline already, it is likely that the association’s full members will make full use of all available lab space before long.

Regional Innovation Monitor Plus 2016 20

Figure 5: Open Hybrid LabFactory Exemplary Layout

Source: Open Hybrid LabFactory e.V. In general terms, it is somewhat difficult to establish the total amount of financial commitment of the enterprise partners, most notable the Volkswagen AG, to the endeavour. The Fraunhofer Project Centre, for example, has attracted funding from the state of Lower Saxony alone (€20m). Furthermore, other full members contribute resources of commonly above €1m. Public support through the federal “Research Campus” programme will amount to up to €2m annually over a timeframe of 15 years, to be matched with regional funding on equal terms. For the first five years, €10m of federal funding were recently approved. Additionally, Lower Saxony has committed to match federal funds equally and the municipality of Wolfsburg has invested €6m in infrastructure. Overall, the planned volume over the project’s period of performance (15 years) may thus well amount to more than €100m, more than €50m for infrastructure and more than €50mfor later, concrete research projects. Additionally, an implicit non-monetary contribution is made by, in particular, the industrial partner’s temporary secondment of well-paid researchers and engineers to the Open Hybrid LabFactory.

Regional Innovation Monitor Plus 2016 21

It is expected that projects funded by industry, starting from the substantial initial commitment of Volkswagen but intended to extend to more and more ‘full members’ will constitute the core of these activities. The university as well as the association can charge full cost plus overhead so that much of the rent and maintenance cost needed for the OHLF facilities as well as the wages of the small management team can be structurally financed out of these projects. Additionally, specific apparatus or devices needed for individual projects will be bought or delivered as in kind contributions by industrial partners. Still publicly funded research projects, in particular from national sources, are considered an important element to contribute to the initiatives gross income later. Out of such projects, overhead costs are more difficult to cover, but they will be both thematically as well as financially relevant to cover those areas of the strategic road map in which industry’s interest may not yet be developed, more cyclical than in others or affected by other external factors. So far, four public funded projects have been launched in the OHLF context. They form the basis for the development of further hybrid lightweight components: •! ProVorPlus Function-integrated process technology for pre-tailoring metal hybrids •! TRoPHy II - Thermoplastic rolling-formed profiles in hybrid construction •! MultiMaK II Development of design and evaluation tools for usable, ecologically optimized multi-material vehicle component concepts in large-scale production •! KonText Load-path-optimized textile technology for light weight mass production Only some of the projects under this umbrella are funded from federal sources, so that, even today, the publicly funded “Research Campus” only constitutes the “core” of an as such much broader endeavour. Overall, about 50 preparatory projects are currently ongoing, from quite small ones (€20-30,000) to several ones with seven-digit budgets. The Fraunhofer Project Centre alone is running 12-14 major projects based on the funding mentioned from Lower Saxony as well as additional bilateral projects with Volkswagen. Not all preparatory projects of all partners will ultimately be moved to the physical facilities of the Open Hybrid LabFactory building. In part, smaller projects will either remain with the university or come to conclusion before the building is finished. Currently, the initiative is working on establishing a concept for precisely this process of transition which on the one hand will occur organically in the course of the next year, following the full opening of all facilities, yet, on the other hand shall be guided by strategic choices as well as the existing projects’ stage of development.

1.9!Leveraging the existing potential In the course of the process aimed at the development of a RIS3 strategy, potentials in the field of lightweight production have been identified under the heading of new materials and production technology. Undoubtedly, many of the region’s key firms and universities – inside and outside of the automotive cluster – command significant capabilities in this regard and globally exploit them to the benefit of the region. Additionally, the region profits from the location of a key Airbus production facility in Hamburg around which a ring of system and component suppliers has grown on Low- er Saxon turf for many years. Moreover, some globally operating medium-sized firms, e.g. in the field of wind turbines and agricultural machines have set precedents in demonstrating that international visibility and economic success can be achieved outside of the region's main clusters and are worthy of public attention. On the side of application oriented strategic research, Lower Saxony can draw on substantial potentials and research capabilities in both science and industry, as evidenced

Regional Innovation Monitor Plus 2016 22

by the high-profile activities around the PZH, the LZH as well as more recently the Open Hybrid LabFactory. On the upside, the regional RIS3 SWOT analysis thus rightly underlines that not only is the quality of both basic and applied research at local universities high, but there is also a great willingness to finance public efforts in the field of pre-competitive research (Staatskanzlei, 2014). In some technological areas, science-industry linkages can therefore already be considered robust and dynamic so that the question is mostly one of sustaining general support – and constantly adapting the thematic orientation to the most current needs and challenges. In other fields, however, these must be considered unsatisfactory and many potentials – not only in SMEs – remain yet to be fully tapped. Not least as the region is characterized by larger geographic distances than others in Germany, many business networks tend to be anchored at a sub-regional level and less than well connected to the overall region’s hotspots of excellence. Fortunately, the region’s network of universities of applied science as well as chambers of commerce is comparatively well positioned and regionally distributed enough to be involved in these local networks, well positioned to address challenges locally through qualification, training and consultancy while at the same time able to open local business owner’s minds for a more comprehensive, international and future-oriented perspective. So far, in particular the latter function may have been performed to a lesser extent than theoretically possible. In this regard, therefore, a substantial existing potential remains to be leveraged not only to sustain a satisfactory level of intra-regional disparities, but also to accumulate critical mass and avoid the region's continued reli- ance on a few lead clusters and facilities to an undue extent. In any case, the region will have to address the upcoming transformative challenges in the manufacturing sector as all others. From Volkswagen itself, over its major system suppliers, as well as the hidden champions in the field of agricultural machines and wind turbines – all will be affected by the implications of Industry 4.0, new materials and sustainable manufacturing. As has been illustrated above, the region has taken first steps in this regard (e.g. the network Industry 4.0) that appear useful, yet have to be further developed. For once, its industry’s comparatively polarized structure could harbour a major opportunity for Lower Saxony – as larger firms are typically better positioned to and faster in addressing strategic, transformative challenges and, given some time, able to understand their implications comprehensively. In Lower Saxony, smaller and medium-sized firms could profit from this learning process – both within the same sector and beyond. In the former case, larger firms usually have a vital interest to spread their insights among their suppliers and customers while in the latter, they will usually not object. Still, it would be up to the regional government to initiate, add momentum to and sustain such a process – if only as firms that do not object may still be a long way from taking the initiative. In this regard, existing activities could be further expanded and intensified to the benefit of a broader range of players. Overall, the three most important challenges in the industrial sector of Lower Saxony can currently be identified as follows: •! Challenge 1: R&D concentration on a limited number of industries Lower Saxony’s research competencies are mainly concentrated on medium-high-tech sectors around a number of key clusters in traditional mid-tech industries, most prominently the automotive cluster in and around Wolfsburg. Per se, there is nothing wrong with such strongholds as their large production facilities help secure regional employment and economic well-being. Moreover, the regional location of corporate decision- making in key headquarters prevents the region’s large production facilities from being relocated when framework condition change – or at least moderate that effect substantially. Moreover, most of the regions industries are mid-tech on the outside and high-tech at the core, as evident in the example of the car industry. Nonetheless, concentration comes with vulnerability – in the short run to corporate crisis and sectoral cycles, in the long run to sectoral, technological or business model transformations

Regional Innovation Monitor Plus 2016 23

that major players may miss (‘Nokia effect’). Should large regional players fail, Lower Saxony can to a lesser extent draw on replacements than e.g. Baden-Württemberg with its plethora of medium-sized technological leaders. Finally, despite some promising developments in the fields of instruments, navigation, communication technology, biotechnology, and aviation, Lower Saxony still faces difficulties in attracting genuine high-tech firms which might prove conducive in establishing genuine, self-sustaining clusters beyond the agglomeration of corporate suppliers in the vicinity of OEM production sites. •! Challenge 2: Weak intermediary landscape beyond few key centres The concentration of Lower Saxony’s innovation system on a few key players and, accordingly, a limited number of hubs for science-industry collaboration around central industrial players makes it difficult for small to medium-sized firms to participate in these efforts. While the region’s lead universities naturally turn towards large private cooperation partners that offer substantial third party funding for strategic pre- competitive research, small and medium-sized enterprises cannot offer similar incentives for public researchers – nor would they typically perceive a similar need for such efforts. At the same time, smaller universities often do not yet possess the capacities needed to support major efforts in advanced manufacturing. Also some lack awareness of larger efforts that in recent years have been increasingly opening up to smaller firms in specific roles and therefore fail to consult them accordingly. As long as this does not happen, smaller firms risk remaining locked into their local business and academic consulting networks that help them in dealing with current problems expeditiously and in a competent manner – while at the same time, may keep them from developing a long term perspective. In normal times, admittedly, this might be considered the privilege of smaller firms who can still pragmatically adapt to changes when they are upon them. Currently, however, a systemic transformation of many value chains seems to be imminent and with that the viability of German SMEs’ central business models may be called into question. In such times, no region can be content with an inward- looking SME sector. Instead, smaller firms need help in gaining access to information about current developments and have their questions addressed by the competent advisers. There is room for improvement in this regard. •! Challenge 3: Integrating SMEs into global value chains The region’s economy is characterised by a relatively large share of small and medium- sized firms that face a variety of challenges ranging from increasing global competition to their dealing with the impending transformation of manufacturing. So far, only a limited number of smaller and medium-sized firms in Lower Saxony have actively entered global markets in a self-determined manner. When they have done so, however, these activities have often proven successful. Consequently, it can be assumed that the potentials for economic success on international markets in Lower Saxony remain less than fully exploited. In part, regional SMEs are integrated into globally oriented value chains as system or component suppliers of local OEM. If they do not belong to one of the region’s major clusters, however, their interest in global developments and international outreach could often be improved. In some cases, owner-controlled companies are successfully serving local customers and lack any pronounced interest in dealing with the complications of internationalisation. In others, they lack suitable personnel that could support them with the language and cultural capabilities needed. Finally, not all of them may have access to sufficient capital – despite all available offers from national level support banks. In brief, the issue is less whether all SMEs in the region should internationalise, but if all of them are in a position to seriously consider and assess the benefits that it may bring. Against that background, the following main opportunities and options can be outlined for the coming support period (and beyond): •! Prepare the automotive cluster for the challenges of the future For decades, the automotive and mobility cluster has guaranteed economic prosperity and well-being for, in particular, some of the region’s otherwise less developed sub-

Regional Innovation Monitor Plus 2016 24

regions. Despite a much needed emphasis on diversification, there will not be any comparable replacement for this cluster in the short- to mid-term. Consequently, all possible efforts should be made to support the region’s automotive firms in preparing for the systemic transformation that will affect the mobility sector as such during the next decade. From a regional perspective, a far more dangerous scenario than the current temporary crisis of Volkswagen is that the local mobility cluster could become caught up in a lock-in while national or international competitors take its global position after the next technological shift – be it towards actual e-mobility or more lightweight, fossil fuel powered cars. If this can be avoided successfully, so that Volkswagen – and with it the local mobility cluster – retains its prominent global position, economic prosperity and well-being in the region will certainly be sustained. •! Connect firms outside the key cluster(s) to technological networks In light of what was said above, however, Lower Saxony urgently needs a contingency plan in case the absolute contribution of the local mobility cluster to regional growth and employment diminishes at some point. With a view to the impending systemic transformation in the mobility sector and the, so far less than adequate, response of the German automobile industry to it, this danger is real. Overall, two ways can be envisaged how the state of Lower Saxony can respond to this challenge. First, with a view to this report’s headline topic of lightweight production, the region could seek to explore and regionally develop additional fields of applications for given technological strengths, e.g. in aeronautics. Likewise, existing potentials in production technology could be further explored and much broader than currently transferred to small and medium-sized firms. To achieve this and establish a more robust framework of related variety, the region’s system of intermediaries needs to be strengthened at its core and further extended at its margins. •! Position firms outside the key cluster(s) in global value chains Currently, Lower Saxony's regional innovation system has to be considered one in which a few major firms, universities and major intermediaries perform an interface function to global networks of knowledge and value creation. At the same time, a large majority of smaller firms is either dependent on them for access to global knowledge and international markets – or simply not very international in orientation. With a view to the obvious benefit that diversification could bring for Lower Saxony it would seem expedient to address and ultimately overcome this situation. Fortunately, some regional firms, e.g. in the field of wind turbines or the construction of specialised agricultural machines have demonstrated that such a step towards a more international – even global – orientation is feasible and can lead to economic success. Against this background, an economic policy that not only aims at the region’s one major industrial specialisation but at emerging sectors beyond it could not only improve knowledge networks within Lower Saxony but also the robustness of its global economic position. In a region with strengths in traditional sectors, a RIS3-type focus on domains with a cross-sectoral nature will be needed to do so.

Regional Innovation Monitor Plus 2016 25

2.!Regional Innovation Performance Trends, Governance and In- struments

2.1!Recent trends in innovation performance and identified challenges In 2013, the region’s overall expenditure on R&D contributed 8.8% (€7.0b) to the German total, largely in line with its GDP share. Regional R&D expenditure per GDP (2.84%) slightly exceeded the national average (2.83%) while the number of EPO patent applications per 1,000 inhabitants (179.5 in 20106) remained markedly below average (Germany: 283.5).7 In 2012, the federal government spent 8.2% of its total expenditures for R&D in Lower Saxony (€1.01b). Moreover, the state spent a disproportionately large amount of the regional level budget in 2011, with 8.6% of national total (€874m) (BMBF, 2014). Fur- thermore, in 2013, 7.8% of all German R&D personnel were employed in the region (47,181 FTE), 61.0% thereof in the business sector (28,769 FTE). In 2014, human resources in science and technology amounted to 1.91 m/0.64m (HRST/HRSTC), i.e. 8.8%/8.0% of the national total and 42.5%/16.1% of the economically active popula- tion8. Other than in some other, non-leading regional economies in the country, the local research and development system remains business-dominated. The business share of R&D expenditure amounts to 67.8%, in line with the national average. Formerly, the business sector’s R&D intensity had been lagging but has picked up during the last decade. Nonetheless, the region’s potential in genuine high-tech sectors is limited in comparison with some exceptions in the fields of instruments, navigation, and biotechnology. Likewise, small and medium-sized firms realise notably less satisfactory results with respect to product and process innovation than larger firms. Furthermore, the high-profile cases of dynamic science-industry cooperations illustrated above remain exceptions in a situation where spill-over effects from public research to the broader economy are more limited than elsewhere in Germany. As outlined above, Lower Saxony is characterised by, in absolute terms, quite substantial regional research capacities that, however, remain concentrated on a below average number of large players and industries. While the regional innovation system remains far from mono-structured, some structural dependence on the automotive and very few other sectors cannot be denied. All in all, the automotive sector accounts for about 50% of the region’s industrial R&D capacities, together with the aeronautics, the shipbuilding and the railway-technology sector it accounts for more than 80%. In most other industries, the innovative performance of regional firms remains below national average. Figure 6: Share of SMEs in business R&D personnel (in %)

Lower Saxony Germany

Source: NIW, 2014b

6 Newest reliable value, figures for 2011 are available but not reliable 7 Figures: http://ec.europa.eu/eurostat/de, queried 17/11/15 8 Figures: http://ec.europa.eu/eurostat/de, queried 17/11/15

Regional Innovation Monitor Plus 2016 26

Likewise, the share of regional research personnel in small and medium-sized enterprises in Lower Saxony has been below national average since the mid-1990s (see Figure 6 above). Overall, however, this issue is not more pronounced than in other, economically strong German regions such as Hesse, Bavaria, Hamburg or Baden- Württemberg (NIW, 2011). Finally, recent studies clearly underline that small and medium-sized enterprises in Lower Saxony are more often ‘imitating innovators’ i.e. even when innovating are less likely to develop market novelties than elsewhere. This is consistent with the fact that they have, on other accounts, been found to invest less in research and development than comparable firms in other German regions. As in other regions, potential economic risks, associated costs, lack of capital and difficulties in finding suitable employees are commonly named as internal barriers to investment. Likewise, small and medium-sized firms in Lower Saxony display a below average tendency to cooperate on issues related to research and innovation and the regional dynamics with respect to high-tech start-ups (and start-ups in general) remains rather low. Yet, the below average presence of non-university public research limits options, beyond the key hotspots, the inclination to cooperate remains too limited, and the region’s participation in national or EU support schemes is too limited. A further problem highlighted in many reports past and present are the large, and in part growing, intra-regional disparities with a view to particular challenges, in particular with a view to social issues and those in the area of qualification. As Figure 7 below indicates, some sub-regions harbour strong potentials while others are faced with notable challenges which, in turn, differ from context to context. Due to demographic challenges and migration of the young and qualified, recent years have seen an increase rather than decrease of the overall disparities in all areas related to population and qualification. Figure 7: Intra-regional disparities in Lower Saxony (Qualification)

Challenges: yellow: few highly qualified, grey: many lacking qualification; red: both issues, Potentials: green: large number of highly qualified, small number lacking qualification Source: NIW, 2014a

Regional Innovation Monitor Plus 2016 27

Another area in which the strong inter-regional disparities in Lower Saxony are expressed is in the field of research and development potentials. As Figure 8 and Figure 9 below illustrate, large parts of the region’s West are more or less devoid of any industrial R&D-personnel, with the only true focus, as expected, around Wolfsburg and Göttingen. The distribution of higher education capacities, in contrast, is somewhat broader, with different sub-centres spread out across those sub-regions that are not directly among the centres of public research. In recent years, this structural situation has remained rather similar, due to continued and targeted investment in non-central and less prominent universities, e.g. in Lüne- burg, that has helped counter some of the negative effects of migration. Figure 8: Share of R&D-Personnel in overall industrial employment 2009 (in %)

3.0% and above 1.5% - 3.0% 1.2% - 1.5% 0.8% - 1.2% 0.4% - 0.8% below 0.4%

Source: NIW, 2014b Figure 9: Personnel employed in Higher Education

Engineering Mathematics, Natural Sciences Agricultural Sciences, Forestry Law and Economics Medicine Humanities Other

Source: NIW, 2014b (SWOT) In summary, Lower Saxony’s intra-regional disparities can be considered pronounced even among Germany’s larger federal states and have left a notable imprint on the region’s general political culture as well as its concrete policy regime.

Regional Innovation Monitor Plus 2016 28

•! Challenge 1: Limited dynamic in SMEs development Beyond the region’s lead firms, it has proven difficult to develop a strong basis of dynamic SMEs that could help bolster cyclical weaknesses or downturns in the sectors most relevant for the region’s larger firms. If the automotive cluster were to face a structural crisis, the region as such would face severe problems. While, in relative terms, the dominance of large firms does not exceed that present in less vulnerable federal states, the main issue is that the region’s SME sector’s innovative capacity is in absolute terms more limited and, in many areas, fails to reach critical mass. •! Challenge 2: Lack of strong players in public research Beyond the region’s lead universities, the region’s local public research landscape is concentrated and limited to a limited number of lead projects. Structurally, the regional innovation system remains business-dominated not only in relative, but also in absolute terms. Outside the key clusters of regional expertise, strong research organisations of the Fraunhofer type are missing. In the less innovative areas of the regional economy and in less developed sub-regions, universities of applied science play a supporting role, which, however, needs to be further developed. •! Challenge 3: Notable intra-regional disparities in qualification In large parts of the region, the qualification of the local workforce must, for different reasons, be considered insufficient for the requirements of a future-oriented, competitive economy. In recent years, this challenge has been intensified due to demographic effects and an increasing migration of the best qualified part of the population to the region’s centres or out of the region entirely. Other than in the area of public research capacities as such, this challenge will be difficult to counter through mere investment and requires comprehensive action.

2.2!Institutional framework and setup Lower Saxony is one of Germany's 16 federal states. As a federal state, the region has substantial autonomy with regard to legislation and tax-raising powers as well as a say in some matters of federal policy. The German Basic Law gives the states considerable say in R&D policy. This is particularly the case for higher education policy where each state independently enacts its own legislative framework. At the federal level, the main actor with indirect relevance for local innovation is the Federal Ministry for Education and Research (Bundesministerium für Bildung und Forschung - BMBF). The ministry is responsible for the bulk of research and technology support programmes funded at the national level as well as the distribution of the federal share of the funding for higher education and public research. On the one hand, the BMBF is important for RTDI investment in the German regions as it provides the federal government’s share of institutional support for public research facilities. On the other hand, it provides substantial lead and seed investments for many key projects in Germany’s regions – as has been illustrated with regard to the Open Hybrid LabFactory and the CFK Valley. Other important shares of the BMBF budget go to federal support for the German Research Foundation and more general innovation support programmes that may have less of a lighthouse function but could still be very relevant for the realisation of innovative potential in Germany’s regional economies. Another main player at the federal level is the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, BMWi), which coordi- nates additional federal support programmes, particularly in the field of SMEs and entrepreneurship/start-up support. Hence, it inhabits a key role with regard to financing research and development projects in smaller enterprises through its Central In- novation Programme for SMEs, the availability of which has a substantial impact on regional innovation system in many German regions. Finally, the national support and development bank KfW Group provides substantial support with regard to smaller firms’ growth financing as well as the later steps during the start-up process of young firms, most prominently in investment-intensive manu-

Regional Innovation Monitor Plus 2016 29

facturing. Moreover, national-level public-private-partnerships in the field of Venture Capital such as the High-tech Gründerfonds (High-tech Start-up Fund) operate nationally and are open for applications from any of Germany’s regions. At the regional level, research and innovation policy is designed by the Lower Saxony Ministry of Science and the Fine Arts and the Lower Saxony Ministry for Economic Affairs, Labour and Transport. Beyond that, the government of Lower Saxony has established an inter-ministerial approach to innovation policy. More recently, the local state chancellery (office of the Ministerpräsident (state premier)) has taken all ERDF and ESF related programming decisions under its remit and thus, by way of RIS3 strategy development, become a key player as well. The Ministry for Economic Affairs, Labour and Transport9 of Lower Saxony is to safeguard and advance regional growth through actions in different fields ranging from labour market policies to traffic infrastructure. Its remit covers the fields of labour market policy, economic policy, industrial and technology policy, business services, regional policy, transport and trade policy, tourism policy as well as policy for small and medium-sized enterprises. Key areas of action are in the fields of labour market actions, the development of infrastructure to create the necessary precondi- tions to attract firms to the region as well as in the field of regulatory simplification. It is responsible for enacting the large majority of regulations concerning innovation relevant policy measures. The Ministry for Science and Culture of Lower Saxony10 is primarily responsible for more than 20 state institutions of higher education, numerous non-university public research institutes as well as for the inter-regional promotion of cultural affairs. Lower Saxony aspires to strengthen the regional research landscape by clearly desig- nating areas of priority, establishing innovative networks, and improving co-operation between science and industry. In detail, its remit covers science and research policy, higher education policy, knowledge and technology transfer policy, culture policy, and the preservation of historical monuments. It works to develop a distinct profile of the Lower Saxon research landscape, develop further the newly introduced bachelor's and master's courses, open institutions of higher education to a larger segment of the population, and to increase participation in lifelong learning. Finally, the regional State Chancellery11 (office of the state premier) has been responsible for the ERDF and ESF managing authorities as well as the regional innovation strategy (RIS3) since 2013. Hence, it has become a third, immediately and inten- sively involved player in the regional innovation system. Beyond these key political players, the following subordinate and associated institutions should be taken into account: Firstly, the NBank is the first point of contact for all potential beneficiaries of support programmes. The NBank is the state support bank of the federal state of Lower Saxo- ny, subordinate to the Lower Saxony Ministry of Finance. It assesses funding applications according to formal criteria. Secondly, the Lower Saxony Centre for Innovation is an independent technical consultancy and think tank which supports the federal state's government in the design and implementation of innovation policy, most notably the regional technology initiatives (see below). Additionally, it supports the NBank by assessing funding applications with regard to their quality and relevance. In doing so, it cooperates with sub-regional entities. Out of its annual budget of €2m it employs a staff of 25. The NBank12 is the universal development bank for Lower Saxony, the central instrument for economic, labour market, housing, and infrastructure support policies. It

9 http://www.mw.niedersachsen.de/startseite/ 10 http://www.mwk.niedersachsen.de/startseite/ 11 http://www.state-chancellery.niedersachsen.de/portal/live.php?navigation_id=5691&_psmand=1003 12 https://www.nbank.de/

Regional Innovation Monitor Plus 2016 30

implements the support policies of the regional government and supports the federal state's administration in the development and design of new support measures. Thus, it enables the regional government to provide high quality consultancy and funding administration services through a one-stop agency. It employs qualified personnel with long experience in the field, which individually consult and assist all applicants and recipients throughout the funding process. The NBank’s key objective is to allocate and deploy the public funds entrusted to it in a responsible fashion for the benefit of the federal state. Monitoring the effectiveness and efficiency of support programmes is part of its mission. It is the central point of contact for all relevant support measures of the European Union, the federal government, the regional government, and - as far as available - the local governments. The NBank became operational in 2004. It is a public-law institution fully owned by the federal state's government under the authority of the regional ministry of finance. For potential applicants, it provides information on support opportunities from multiple sources. Additionally, it has a say in the selection of the projects to be supported under a variety of local support programmes, even if criteria are set by the ministry. To establish a coordinated approach between the different actors responsible for local innovation policy, the Innovation Centre Lower Saxony13 was set up in 2003 to work as an independent consultant for the regional government with a focus on future- oriented key technologies with particular relevance for the regional firms and the stat- ed mission to “create and safeguard regional employment by means of the development of technological potentials in Lower Saxony”. Its task is to stimulate government, science, and industry to conceive novel approaches to develop and disseminate new technologies in Lower Saxony. The Innovation Centre fulfils a diverse range of tasks from the observation and assessment of technological trends to the conception and evaluation of policy measures in the field of technology/innovation policy. Moreover, it manages the Innovation Network Lower Saxony (Innovationsnetzwerk Niedersachsen), a communication and cooperation platform uniting more than 275 regional organisations involved in innovation support and business promotion. In this network, stakeholders from the private sector, business organisations, universities, research organisations, technology transfer agencies as well as municipal business promotion agencies discuss issues of related technological trends, support policies, technology transfer and regional development. While technology transfer offices as well as incubators and technology parks are thus not centrally administered, they maintain a regular exchange of opinions. Finally, the Innovation Centre provides consultations and assistance to the regional government with regard to a technology oriented investment promotion strategy. In all these fields it remains a close-to-government consultant, while the final strategic decisions with regard to regional innovation policy are taken by the responsible ministries. Under the earlier conservative government, there was a central “Foundation Future and Innovation Fund Lower Saxony”, which from 2007 to 2010 supported projects conducted by local companies or scientific institutions. The fund was set up with a capital endowment of €20m that was meant to be raised to €100m through contributions by both the government and the business sector. As a result of the economic crisis and other factors, however, the business sector could not be convinced to contribute to a significant extent towards the fund. Hence, the fund was formally dissolved and its capital assigned to other budgetary purposes. Still operating and regionally quite relevant, in contrast, is the Volkswagen- Stiftung14, an independent scientific foundation named after, and historically related to the (partial) privatisation of the Volkswagen AG following WWII. Its capital amounts to about €2.4b of which it hands out about €110m of research funding annually. Germany-wide, it is one of the most renowned and most broadly engaged research foundations beyond the formal public research councils. Importantly for the

13 http://www.iz-nds.de/ 14 https://www.volkswagenstiftung.de/

Regional Innovation Monitor Plus 2016 31

region, a share of this funding is “in advance” (Vorab15) distributed to major innovation projects in the state of Lower Saxony such as the Open Hybrid LabFactory. Twice a year, the state government submits proposals to the board of trustees of the Volkswagen Foundation. Typically, overall Vorab-funding amounts to more than €50 million per year, based on a share of 10% of all Volkswagen Stiftung dividends on Lower Saxony's government’s shares held in the Volkswagen AG, as well as further capital income on other separate capital stocks. Over the past two decades, more than one billion Euro have thus been allocated to structural improvement measures on Lower Saxon research and higher education and – somewhat less commonly – high- profile projects in Lower Saxony. Thus, it constitutes one of the most sustainable sources of finances for regional innovation policy. Currently, calls for proposals include the (inter)nationally oriented “Top-level Research in Lower Saxony” to support applications for a new initiative launched by the federal government and the federal states and the more locally oriented “Research at Universities of Applied Science as a Motor for Regional Development”. Finally, it should be mentioned that, for historical reasons, the Lower Saxon government is not only a major stakeholder of the Volkswagen Group and major player in its (supervisory) board of directors but, irrespective of the concrete share it currently holds, is granted a right of veto on major decisions through the “Volkswagen Law”16. This corporatist setup is unique by European standards and often hotly debated, but has been found in keeping with European legislation. Consequently, the Lower Saxon government is not only highly dependent on the economic destiny of the local mobility cluster, but at the same time a major and at times quite active player within it. For better or worse, the destinies of the local automotive industry and the regional government thus remain intricately connected – to an extent unknown even in Southern Germany’s prime automotive locations.

2.3!Regional innovation policy mix The overall importance of EU-funding in the Lower Saxon budget has always been substantial: in the 2007-2013 support period, €589m of ERDF and €210m ESF funding were allocated to the Convergence Objective in the NUTS 2 region of Lüneburg, while the rest of Lower Saxony received €639m of ERDF funding and €237m of ESF funding under the Competitiveness and Employment Objective (State Chancellery, 2014; State Chancellery Website17). With regard to specific R&D funding, ERDF funding amounted to €170m for the period of 2007-2013, whereas comparable regional and federal level programmes amount to no more than €80m. Hence, EU funding was crucial for Lower Saxon innovation policy not only in absolute, but also in relative terms. With regard to general cluster and network funding, ERDF resources amounted to €36m during the 2007-2013 period compared to which, even the regional technology initiatives (see below) had a more limited budget (€17m, Prognos, 2010). During the past decade the Lower Saxony Ministry for the Economy, Labour and Transport pursued the following political objectives (Brandt, 2011): Build up a research infrastructure which is highly relevant for the economy; Provide support for innovation in future fields of activity in Lower Saxony; Strengthen technology transfer; Support the starting conditions for start-up entrepreneurs; and Support the process of innovation in the socio-economic field. This overall approach towards strengthening the region’s competitiveness reflected major recommendations of recent studies commissioned by the Ministry for Economic Affairs, Labour (NIW, 2008, NIW et al. 2004) and also analyses conducted within the overall framework of the current ERDF funding period (Steria Mummert et al. 2010).

15 https://www.volkswagenstiftung.de/foerderung/vorab.html 16 https://en.wikipedia.org/wiki/Volkswagen_Law 17 www.stk.niedersachsen.de/startseite/themen/regionale_landesentwicklung_und_eufoerderung/ eufoerderung/efre_esf/efre-und-esf-124140.html

Regional Innovation Monitor Plus 2016 32

In general, regional innovation policy combined generic, low-threshold support for local network initiatives of different kinds with more targeted investment in a number of selected initiatives in key sectors, the Regional Initiative for Satellite Navigation, the Regional Initiative for Fuel Cells, the Regional Initiative BioRegioN, the Regional Ini- tiative for Microsystems Technology, the Regional Initiative for Nanotechnology and Material Sciences, the European Centre of Adaptive Systems (ECAS) e.V., the Regional Initiative Logistics, and the Regional Initiative PhotonicNet (Brandt, 2010). Compara- ble to cluster platforms, these regional initiatives constituted a relevant, focusing element of regional innovation policy. In line with this, the Lower Saxon government’s 2012 “Concept for Innovation”: “Progress and Growth for Lower Saxony” underlined the ambition of “strengthening strengths” and “integrating instruments” to support the key field of energy, mobility, agriculture and food industry, health as well as coastal and maritime economy as key fields of action. In 2013, however, a new government took office so that the ambitions of this strategy could not fully be pursued. During the subsequent, first years of Social Democratic legislature, regional economic policy saw a certain shift away from strengthening existing strengths, based on a perceived need for greater regional cohesion, which also affected regional innovation policy. Although little was actively changed during the last years of the 2007-2013+2 support period, few specific high-profile public investments were promoted either. Moreover, the regional government’s first reaction to the RIS3 policy agenda remained sceptical and the process was less than vigorously pursued. Ultimately, the European Commission took a clear stance on the need for a comprehensive and clearly prioritising RIS3 strategy, so that in light of the still substantial role of ESIF-funding for Lower Saxon innovation policy (cf. Table 3), the process of drafting was pursued with greater priority. Table 3: ESIF allocations to Lower Saxony past and present 2007-2013 period 2014-2020 period difference ERDF €1,227m €691m -43.7% ESF €447m €287m -35.8% Total €1,674m €978m - 41.6%

Source: Lower Saxon State Chancellery, 201518 In the end, the regional government submitted a detailed strategy that identified the following main domains of specialisation for the 2014-2020+3 support period (State Chancellery, 2014). •! Lightweight design, e-mobility and aviation under the heading of mobility; •! Red biotech, medical technology and e-health under the heading of health; •! Geothermal and wind energy under the heading of energy economy; •! Digital- and creative economy under the heading of digital media; •! Functional materials and lightweight design, recycling, intelligent glass and meas- urement under the heading of new materials/production technology; •! Sea technologies and green shipping under the heading of maritime economy. Beyond those the strategy points out the following focal challenges: •! Knowledge and technology transfer; •! Innovation capacities in SMEs; •! Capacities at universities and public research institutes; •! Networks and clusters; as well as some cross-cutting topics: •! Climate protection; •! Equal opportunities;

18 http://www.eiz-niedersachsen.de/wp-content/uploads/2015/05/2015-04-21-Praesentation-4.pdf

Regional Innovation Monitor Plus 2016 33

•! Qualified workforce; •! Start-up culture; •! Development of rural areas; •! Digital growth. Building on those, it defines the following strategic directions: •! Better innovative capacities in SMEs and the crafts sector; •! Improved start-up culture; •! Viable rural innovation systems; •! More clusters and networks; •! Leading-edge research and technology transfer; •! International knowledge networks; •! Ecological transformation; •! Better qualified workforce; •! Diversity and equal opportunities in innovation. With a view to this overall framework, three strategy fields are defined as follows: acti- vating innovation potentials in SMEs and the craft sector; strengthen leading-edge research and its transfer to the economy; further development of the regional cluster landscape and accompanied by five horizontal strategy fields: improve the availability of a qualified workforce for innovations; increase the number of regional start-up and a culture supporting them; promote an ecologically responsible transformation; leverage the potential of diversity and equal opportunities for innovation; support international and cross-national knowledge networks. Furthermore, it highlights three headline topics for regional innovation policy with “Industry 4.0”, “Metropolitan Solutions” and “Rural Solutions”. Notably, the RIS3 document includes an indicative financial allocation plan for these strategy fields, which was used as the direct basis for the development of support measures during the 2014-2020+3 support period (State Chancellery, 2014). In detail, the following measures were mentioned: •! Activation of innovation potentials in SME and handicraft: Indicative budget: €103.8m, 2014-17. •! Strengthening leading-edge research and knowledge & technology transfer: In- dicative budget: €47.6 m, 2014-17. •! Intelligent further development of cluster and network strategies: Indicative budget: €9.3 m, 2014-17. •! Strengthening innovation potential in rural areas: Indicative budget: €28.7 m, 2014-17. •! Further development of cross-border knowledge networks: E.g. INTERREG North Sea V B. •! Improve the qualification of the workforce for innovation in Lower Saxony: €68.1 m, 2014-17. In general terms, all efforts aim to: •! Improve awareness for issues like demographic challenges in firms; •! Support the attraction of qualified employees to Lower Saxony; •! Match supply and demand for future-oriented qualification at local level; •! Improve framework conditions through networks and place marketing. At the time of writing this report, the drafting and approval of policy guidelines for the 2014-2020 period was mostly complete, with some central elements like the main

Regional Innovation Monitor Plus 2016 34

programme for innovation subsidies in SMEs missing. For the time being, therefore, a concrete portfolio analysis of the support measures offered can only be conducted to a limited extent, while a general appraisal of the emerging policy mix can nevertheless already be given. Still, these should, to a certain degree, be read as temporary if only as, naturally, no reliable experiences could so far be gained with any of these recently passed policy guidelines. By means of an overview genuinely focused measures were combined with those that are still mostly horizontal in nature – even though formally, all applications have to be confirmed “in line with the RIS3 strategy of the region”. Also it has opened the understanding of innovation to “agricultural applications” as well as “social innovation, local and regional needs”. Focused measures: •! Regional level technology initiatives and innovation networks; •! Support for non-university applied research (e.g. institutes like PZH, LZH); •! Innovation through higher education and public research, Support up to 90% of project cost, no upper limit; Horizontal measures: •! Lower Saxon Programme for Innovation Support – R & D (yet to be passed); •! Low-threshold innovation support for SMEs and the handicraft sector; Support up to 35% of project cost, up to €100,000; •! Innovation networks (support for technology transfer by cooperation); Support up to 40% of project cost, up to €150.000; •! Innovation consultancy and Innovation audits; provided by the NBank under the EEN framework; Non-technological innovation and specific applications: •! Support for operational groups in the context of EAFRD-EIP; •! Programme for social innovation, local and regional needs. In summary, a complex and in part quite coherent mix of policy measures has been launched. Next to all of them are administered by the NBank with a view to control- ling, accounting and formal decisions, whereas substantial decisions regarding the award of funding are prepared and taken by the Centre for Innovation. If particular programmes involve matters of e.g. higher education or agriculture, specific stakeholders like the Scientific Commission of Lower Saxony or the Lower Saxony Chamber of Agriculture may be consulted.

Regional Innovation Monitor Plus 2016 35

Table 4: Regional Innovation Support Measures Title Duration Policy priorities Budget Organisation responsible More information Regional level since 2004, 2.3. Knowledge transfer struc- initially €2m p.a. Ministry for the Economy, RIM Plus Repository; technology initiatives continued tures between academia and currently about Labour and Transport of LS Centre for Innovation and networks 2007-2015 industry €500.000 p.a. Lower Saxony (MW) (centrally managed by Cen- 2015-2020+3 (personnel cost in Cen- tre for Innovation) tre for Innovation) Lower Saxon Programme for 2009-2015 4.1. Direct funding to business €96.6 m (total) Ministry for the Economy, RIM Plus Repository Innovation Support – Re- 2016-2023+3 R&D and innovation (2007-13) Labour and Transport of (2007-13 period) search and Development (to (in draft) €50,4 m (total) Lower Saxony (MW) not yet available be extended) (2014-20) (2014-20 period) Low-threshold innovation 2015-2020+3 4.1. Direct funding to business €20,0 m (total) Ministry for the Economy, NBank website support for SMEs and the R&D and innovation Labour and Transport of handicraft sector Lower Saxony (MW) Innovation through 2015-2020+3 2.3. Knowledge transfer struc- €83,1 m (total) Ministry for Science and NBank website higher education and public tures between academia and Culture (MWK) research industry Innovation networks 2015-2020+3 2.3. Knowledge transfer struc- €6, 6 m (total) Ministry for the Economy, NBank website (support for technology tures between academia and Labour and Transport of transfer by cooperation) industry Lower Saxony (MW) Innovation consultancy 2015-2020+3 2.3. Knowledge transfer struc- €7, 4 m (total) Ministry for the Economy, NBank website (support for technology tures between academia and Labour and Transport of transfer by consultancy) industry Lower Saxony (MW) Support for non-university 2015-2020+3 2.3. Knowledge transfer struc- €10, 0 m (total) Ministry for the Economy, NBank website applied research tures between academia and Labour and Transport of industry Lower Saxony (MW) Support for operational 2015-2020+3 4.1. Direct funding to business €14,0 m (total) Lower Saxony Ministry of Ministry website groups in the context of EIP R&D and innovation Food, Agriculture, and Consumer Protection (ML) Programme for 2015-2020+3 4.1. Direct funding to business €12,1 m (total) Lower Saxon NBank website “social innovation”, R&D and innovation State Chancellery (StK) local and regional needs Source: NBank Website; ML Website; MW Website; MWK Website; StK Website; NBank 2015; ARL-LG, 2015; RIM Plus Repository Lower Saxony

Regional Innovation Monitor Plus 2016 36

2.4!Appraisal of regional innovation policies Overall, Lower Saxon innovation policies can be considered as consequential given the nature of the federal state, even if potentially less specialised than elsewhere. First and foremost, they are based on a sound analysis of regional innovation potentials that draws on multiple studies which have over the years been performed by many actors, most prominently the Lower Saxony Institute for Economic Research. The regional innovation strategy defines key areas of intervention based on facts. Secondly, they seek to consciously address the discrepancy between a limited number of globally recognised hotspots of development and a large rural periphery facing quite different opportunities and challenges. The prominent differentiation between urban and rural solutions in the innovation strategy appears logical and effective. Thirdly, they prominently take into account the region’s current areas of strength. While the main areas of intervention may not necessarily be technically reflected in the new array of support programmes, they will still be useful to guide larger individual investment decisions over the next support period. Finally, they take up relevant trends such as Industry 4.0, even if those may not yet be of paramount importance for the majority of small and medium-sized firms in the regions. Nonetheless, key actors recognise that the challenge will be upon them sooner or later and seek to adequately promote an exchange around them. In a sense, this new setup constitutes a positive departure from what had for a long time been a somewhat less than coherent innovation policy. For a number of years, and at the time of writing of the first regional report under the framework of the Regional Innovation Monitor project, Lower Saxony’s regional policy-makers were placed in a dilemma between addressing the needs of the rural periphery and the needs of urban centres and, with regard to innovation, the needs of some major players and the majority of local SMEs. Per se, this is a structural challenge which cannot be resolved in the short-term. Nonetheless it needs to be translat- ed into an intelligent policy system that strikes a balance between accepting disparities where they cannot be changed (and further investment bears little promise) while pursuing vigorous transformative efforts where a local or sectoral difference can be made. Inevitably, positions on how this balance can best be achieved vary and, by tradition, differ between different political parties. Somewhat unsurprisingly, therefore, the past decades have seen certain back-and-forth tendencies in overall priority setting in line with changing political majorities. By and large, Social Democratic governments have tended to favour rural areas while Christian Democratic governments have tended to favour strengthening the strengths. Independent of their political affiliation, however, all governments have worked closely with the local mobility cluster and sought to exert positive influence on decisions within the Volkswagen Group. Among German federal states, Lower Saxony had for a long time opted for an approach which, both with a view to its budgetary setup as well as to public communication, fulfilled all criteria of transparency that were legally required but rarely more. While other federal states maintained public websites on which detailed budgetary allocations to individual measures for individual support measures were available upon request, such information was very difficult to obtain in Lower Saxony. Likewise, the connection between the main budgetary titles for innovation support and individual support measures was complex and difficult to understand. With transfer of responsibility for ERDF and ESF policy to the state chancellery and the development of the local RIS3 strategy, this policy approach seems to have notably changed for the better. With greater clarity than other RIS3 strategies in Germany, the Lower Saxon documents connect fields of actions to concrete measures and even present an indicative financial plan for the allocations to those. Also, final budget allocations for all relevant EU-funded support programmes are now available in an easy to access overview document on the website of the NBank.

Regional Innovation Monitor Plus 2015 37

Less convincing for the moment remains the approach of allocating support to the various specialisation fields that the RIS3 strategy has identified in a per se quite suc- cinct manner. Even if “RIS3 conformity” has become a stipulation for most even small- scale measures, more elaboration is needed on how that can be brought in keeping with a policy that, to a substantial extent, aims at exactly those SMEs and micro-firms which, so far, do not constitute key drivers of specialisation or key clusters of technological competence in Lower Saxony. Arguably, specialisations can successfully be pursued through planned programmes like “Innovation through higher education and public research” and “support for non- university applied research” which naturally aim at those stakeholders that already possess prominent R&D capabilities. In that sense, the budgetary rebalancing of ERDF spending in favour of these two programmes can be considered welcome. Also, Lower Saxony’s Ministry of Science and Culture makes its own, complementary investments to that end. Still, horizontal SME support remains equally prominent. At the same time, the region’s – nearly unique – decision to join its ERDF and ESF operational programmes into one multi-fund programme with an integrated target system must be considered a substantially positive and effective step with a view to the European Commission’s ambition to have regional development strategies contribute to economic transformation in a comprehensive manner rather than with an isolated focus on research and innovation. Against the same background, the federal state’s declared effort to develop a qualified workforce for innovation can be considered a valuable element of a sustainable and comprehensive approach towards developing relevant innovation strategies. Likewise, the decision to pursue these ambitions through localized platforms of both enterprises and relevant social partners must be considered a well-designed approach for a large region with diversified labour markets. Furthermore, the Lower Saxon government puts a strong emphasis on sub-regional differentiation in next to all the analyses it commissions and next to all strategies it develops. In Germany, this high-level focus on sub-regional development can, if at all, only be found in one or two other federal states (of equal size and with equal issues of intra-regional disparities). On the one hand, this approach is straightforward, logical and self-explanatory as socio-economic disparities within the region are real and pressing and a one-size-fits-all strategy would be certain to fail in supporting and/or leveraging the development opportunities outlined in this report. Undoubtedly, many location-based challenges occur on a functionally lower level than that of German federal states and, consequently, state-level strategies have to reflect this. On the other hand, opening the door towards regional differentiation too strongly risks re-inviting struggles for sub-regional (re-)distribution, parochial policies and investments in sub- critical infrastructures. In short, it can, effectively and swiftly, counteract the original idea of smart specialisation – to support domains of excellence (or visible potential) that have a chance to become successful on international markets. Also, it risks coun- teracting efforts to improve connectivity on a regional basis and internationalise a broader range of small and medium-sized firms. Initially, the first drafts for the RIS3 spurred worries that all this might happen. The final document, however, now looks more convincing in terms of connecting regional and sub-regional perspectives. With a view to support conditions and eligibility criteria, the portfolio of proposed measures can be considered pertinent and, drawing on the long practical experience of the NBank, well-designed. Public research organizations receive up to 90% support for approved projects, which is adequate given their usual financing model. That projects in and networks among SMEs are supported with 35-40% of eligible cost is sufficient to provide an incentive yet not enough to evoke “artificial” activities in response to available funding. With €100.000-150.000 individual support volumes are large enough to maintain viable projects for the purpose intended yet limited enough to allow for a spread of funding between various qualified applications.

Regional Innovation Monitor Plus 2016 38

Some measures, like the continued effort to create an entrepreneurial culture in what remains a rather non-urban region characterised by a limited availability of private venture capital can be rightly regarded with scepticism. At the same time, some measures pursued during the 2007-13 support period have been discontinued even though they would still fit with the adapted support paradigm and available monitoring results did not indicate outright failure. As in many German federal states, the overall support architecture drawing on Euro- pean funding can be described as one suitable to complement efforts supporting large scale projects in the region's key areas of specialisation. With a view to the region’s manifold challenges resulting from sectoral, urban-rural as well as general geographic disparities this can be considered appropriate, in particular as the regional government disposes of many other means to support and promote key projects in applied science and science-industry cooperation, be it in collaboration with federal programmes or on its own. In the following, some summary considerations will be developed on these larger scale options with a particular view to their relevance for lightweight design and, more generally, advanced manufacturing. Firstly, Lower Saxony has profited from a joint engagement of the federal and the regional government in high-profile projects such as the Research Campus Open Hybrid LabFactory. Leveraging these potentials is crucial for the future development of advanced manufacturing hotspots in the regional economy and to prepare the region’s main clusters for the systemic transformations that will be affecting the mobility and other industrial sectors in the coming years. In this regard, the Lower Saxon regional government has found a suitable format to support and develop genuine lighthouses of strategic development in collaboration with key industrial actors. In this regard it matches national and sets European standards. Secondly, the regional government’s renewed focus on qualification is a step towards a comprehensive development of future industries. On the one hand, it becomes evident in the promotion of technology and industry specific curricula of the region’s leading technical universities (and efforts to structurally strengthen those) and major initiatives like the PZH, LZH and the Open Hybrid LabFactory. On the other hand, it is reflected in a broad based approach seeking to leverage the capabilities of universities of applied science and regional chambers in a more targeted manner and to reinvigorate their collaboration with local SMEs to develop location-based qualification solutions across the region. Moreover, the integration of the OP ERDF and the OP ESF reflects the adoption of an integrated viewpoint on regional development. For broader diffu- sion of an adoption of advanced manufacturing technologies, this exemplary, coordinated approach will be of utmost importance. Thirdly, many smaller manufacturing firms may indeed only seek to resolve smaller issues in their production, so that the financial scope that the region’s support programmes offer may be in fact suitable for the task at hand. In small firms, even the implications of Industry 4.0 or lightweight production can, for the time being, be dealt with in comparatively small projects. Arguably, awareness and piloting – the explora- tion of future challenges and opportunities - is at this point in time the most pressing task for them. That the regional government has reorganised its offer of funding programmes from a more standardised to a more target group specific ‘menu’ with a specific focus on ‘low threshold projects’ must be generally welcomed against this background. Finally, however, in an industrial region like Lower Saxony with a RIS3 targeted to no small extent on issues related to advanced manufacturing, one would hope to see a larger share of tailor-made measures beyond one nascent platform and a few lighthouse projects. Beyond the development of new solutions, substantive support should be offered for their adoption on a broader basis. Arguably, a programme that supports adoption, yet goes beyond ‘low threshold support’ could be added or the soon available standard SME support guideline be exploited in that direction.

Regional Innovation Monitor Plus 2015 39

2.5!Policy good practice Lower Saxony provides several good practice examples on how to establish successful bottom-up network and cluster structures of which two shall, in the following, be pre- sented in some detail: Among several initiatives, the state government has for a number of years fostered the establishment of Regional Technology Initiatives (Technologische Landesinitiativen)19 in key industrial and technological sectors, which have been identified as being of particular importance for the economic development of the region. The overall aim of these initiatives is to initiate and foster networks between different actors from industry and science, all of which are considered to have the potential to establish structures that can become self-sustaining in the long run. The responsible programme agency is the Innovation Centre Lower Saxony. To become funded as a Regional Technology Initiative, partnerships have to meet the following criteria: a clear identification and description of a future-oriented, long-term trend, evident market dynamics in the suggested domain as well as visible potential among regional actors to contribute to the domain’s development. (Notably, this approach was set up years before the conception of the smart specialization strategy). Typically, Regional Technology Initiatives were established for a period of about three years and funding only extended following a positive evaluation by the Centre for In- novation of Lower Saxony. During these three years, the state government finances an agency/office as well as a separate budget for innovation-oriented collaboration projects among the initiative’s partners. In very general terms, the overarching aim of the Regional Technology Initiatives is to better and on a broader basis connect regional universities and the regional business sector. A special focus is on the participation of SMEs which, as outlined above, continues to be an issue across the region. During the past five to ten years, Regional Technology Initiatives have been successfully set up in the fields of adaptronics, aviation, fuel cell technology and e-mobility, life science, logistics, micro-systems and sen- sor technology, nanotechnology and material sciences, food sciences and telematics as well as maritime technologies. As evaluations by the Innovation Centre Lower Saxony indicate, the overall initiative has so far been successful in initialising R&D projects, in leveraging funding on national and EU-level and also in strengthening Lower Saxony’s international visibility in the respective fields. In 2009, the networks involved more than 9,700 partners. While the regional government contributed a mere €2.7m of funding to the networks’ organizational structures, the main public contribution of more than €33m came from national and European sources. Also, the local industry had contributed more than €39m funding i.e. more than half of the initiatives' funding (Brandt, 2011). Apparently, they have thus not only been successful in addressing a relevant gap in the regional innovation system but also in meeting a need and interest of (often larger) businesses to broaden their cooperation beyond the range of their typical regional partner organizations in science and industry. During the 2007-13 support period, the management of the individual initiatives rest- ed with organisations in specific sub-regions. For the 2014-2020 support period, activities have been centralised in the Lower Saxony Centre for Innovation that now technically employs all initiatives' managers and facilitators (1.5-3 per initiative) directly from its budget. Thus, efforts related to Regional Technology Initiatives make up about half of the Centre for Innovation’s activities. During the 2014-20 support period, the number of supported initiatives has been substantially reduced, arguing that a focus should be placed on those that need state support for structural reasons (LifeSci- ence) or due to the novelty of the issue in question (Industry 4.0). Overall, the following key networks/technology are either still or newly supported: Network Industry 4.0 Lower Saxony, BioRegion – LifeSciences Lower Saxony, eHealth.Lower Saxony, Prod- ucts Suitable for Demographic Change (LINGA).

19http://www.mw.niedersachsen.de/portal/live.php?navigation_id=31909&article_id=110446&_psmand=18

Regional Innovation Monitor Plus 2016 40

As far as an assessment can be made after a few months, most initiatives that are no longer supported have successfully entered the stage of becoming self-sustainable, most that are continuously supported are continuing to work as relevant clusters20 and activities among those newly initiated have started with momentum and substantial industrial support. How they will develop over the support period remains to be seen, yet, with the new approach an orderly process has been established to determine their fate in the future. Links to the Regional Technology Initiatives/Networks can be found here: •! Netzwerk Industrie 4.0 Niedersachsen; •! BioRegioN - LifeSciences Niedersachsen; •! eHealth.Niedersachsen; •! Landesinitiative Niedersachsen Generationengerechter Alltag (LINGA). A second good practice example, even if nascent, is the regional concept to secure and sustain a qualified workforce21. Until 2020, more than €900 million will be allocated for policies serving that purpose in one way or the other2223. Some of these funds, even if not the majority will be assigned to the “qualification of the workforce to create a basis for innovation” (State Chancellery, 2014). The rationale behind this major joint effort of the Ministry of Economic Affairs and the Ministry of Science and Culture is to counter the implications of demographic change and to create an optimal environment for innovation. Beyond broad-based efforts to qualify the region’s future workforce, planned initiatives aim to support new approaches through which regional universities and universities of applied science can help increase the absorptive capacity and competitiveness of local SMEs, thus rendering work opportunities provided by them more attractive. Up until today, the regional government has initiated a number of concrete activities such as the “initiative for a qualified workforce”, the “demographic committee” and the “development programme for universities of applied sciences” – the latter aiming to secure about 3,400 opportunities to study. Also, the regional concept has played a major role in re-orienting the region’s concept for ERDF support during the 2014- 2020 period. Based on these first foundations, further steps shall be taken to qualify academic experts and to support the transfer of knowledge between different scientific institutions and firms in a local context. In line with the recent academic discussion, the government considers higher education and public research institutions valuable providers of momentum and orientation in those regions that lack major industrial lighthouses and/or have a stronger focus on agriculture. Not least, concrete major projects such as the “Open Hybrid LabFactory” can be considered part of or at least aligned with the overall concept and the establishment and expansion of further, similar, projects shall be supported, whenever the opportunity arises. Furthermore, ERDF- and ESF-funding opportunities from the multi-fund programme shall be leveraged to the best extent possible to support cooperation projects between science and industry. Moreover, broad-based regional networking shall be supported through a number of initiatives suitable to enhance and strengthen cooperation and communication between science and industry, among them24:

20http://www.mw.niedersachsen.de/portal/live.php?navigation_id=31909&article_id=110446&_psmand=18 21http://www.mw.niedersachsen.de/portal/live.php?navigation_id=34431&article_id=122524&_psmand=18 22https://www.nbank.de/Privatpersonen/Ausbildung-Qualifikation/Unterstützung-regionaler- Fachkräftebündnisse/index.jsp 23http://www.stk.niedersachsen.de/aktuelles/presseinformationen/landesregierung-stellt-konzept-zu- fachkraeftesicherung-und-wissenstransfer-vor-132480.html 24http://www.nbank.de/Unternehmen/Innovation/index.jsp

Regional Innovation Monitor Plus 2015 41

•! “Innovation Networks”, focused on specific themes and driving science-industry collaboration within their specific domain; •! “Transfer Consultancy” provision to small and medium-sized firms; •! Internships of advanced students and regional enterprises; or •! Events at which local higher education or public research organisations inform partners about their activities and the potential benefit that they may harbour; •! Start-up support, in particular for high-quality, opportunity-based start-ups; •! The maintenance of existing technology parks and incubators; •! Coaching in the cases were a successor has to be found for a general manager; •! Low-threshold, small-scale loans at favourable conditions. Through this somewhat complex, yet strategically coordinated set of measures, the regional government seeks to, in a sustainable manner, maintain and improve those local framework conditions and potentials that will ultimately be needed to retain a qualified workforce in the region. Notably, only a small part of the activities planned under this framework will be origi- nally and genuinely financed from regional resources (i.e. the regional budget, exclud- ing ERDF/ESF). Instead, the regional government takes on the role of a strategic moderator who defines visions and objectives, taking into account both obvious challenges and means available. At the implementation level, moreover, a plethora of funding sources is channelled through and administered by a limited number of regional development banks and other support organizations.

2.6!Possible future orientations and opportunities As described above, major challenges for the RTDI-policy in Lower Saxony stem from the need to sustain and reinforce focal areas of strength and broaden the base of innovative activities in the local economy while at the same time addressing the region’s various sectoral and geographical disparities. In the coming support period much will depend on whether the regional government finds a suitable mode to balance these in part conflicting objectives. In the past, analyses of Lower Saxony’s RTDI performance propose the following main fields of action for innovation policy (e.g., Steria Mummert et al. 2010; NIW 2008; NIW et al. 2004): identify and strengthen economic domains beyond the automotive sector which appear suitable to develop a profile in global competition and in which Lower Saxony already harbours some potential; with regard to the region’s internal disparities, there is a need to increase absorptive capacity and low-threshold innovation in peripheral regions and to address issues related to qualification. Evidently these objectives can be considered conflicting, at least under conditions of limited resources. With the amount of ERDF and ESF funding allocated to the region significantly reduced during the 2014-20 support period it remains doubtful if both can still be pursued in parallel – or if the broad-based pursuit of the latter may put in jeopardy any chance to realise advances with regard to the former. Currently, regional policy responds in several ways to the spatial disparities in Lower Saxony. From 2007 to 2013, each district in Lower Saxony received a part of the EDRF budget for independent distribution, resulting in a lack of inter-regional coordination and structural impact of ERDF-funded innovation measures (NIW, Prognos 2010). Still, the decision to abolish it met with substantial resistance and Lower Saxony’s four sub-regional development agencies (addressing the region’s four former districts) remain in charge of up to one third of the assessment relevant for project selection, with a view to the proposal’s “regional fit”. In addition, five districts in the southern part of Lower Saxony have been given priority access to some public funds. During the early stage of the programming period, strengthening the regional approach within Lower

Regional Innovation Monitor Plus 2016 42

Saxony even further by using the instrument of integrated territorial investments in all four regions of Lower Saxony was considered, an ambition that was, however, later dropped as the related inefficiencies would have been too obvious. In summary, a positive scenario would see Lower Saxony benefiting from a RIS3 that increases the competitiveness of leading sectors and, at the same time carefully broad- ens the innovative basis of the regional economy in sectoral and intra-regional terms into those fields with underutilized capacity. A negative scenario would see Lower Saxony putting too much weight on the reduction of intra-regional disparities, be in- sufficiently ambitious in terms of supporting key areas of expertise and as a result become locked into a fragmented and inefficient support system. This latter perspective appears somewhat worrying, as what is at stake are less the key investment projects for advanced manufacturing or within the traditionally strong sectors of the region, such as the automotive sector. In those, most funding for pre- competitive research or innovative activity is either provided by large corporations themselves or through federal level programmes. If regional funding is relevant at all, it is typically allocated through tailor-made measures rather than the standardized support programmes open to all. Instead, regional funding remains key to the development of those domains like the agro-food industry, wind energy, maritime technologies or new material based products (NIW, 2014a, NIW, 2014b) which are not yet strong enough to meet national criteria of excellence but may be the only real options to structurally diversify the basis of Lower Saxony’s regional innovation system and, in the long run, render it less dependent on its current key areas of strength. When regional, ERDF-funded policy continues to fail in spurring entrepreneurial discovery processes in emerging domains, important chances for a reduction of potential vulnerability may be foregone. To the contrary, a serious pursuit of the domains of specialisation outlined in the current RIS3 strategy would in principle provide ample opportunities to lay the foundations for future regional areas of strength with international relevance and a potential to locally generate growth and employment. At the same time, it appears indeed likely that regional funding has some potential to mitigate intra-regional disparities. Quite evidently, however, this perspective has no real chance of materialising without the active participation of actors in peripheral regions. As Baden-Württemberg has demonstrated, there is no reason why the regional government could not expect all actors to actively bid in competitive calls at a regional, rather than a sub-regional scale. Self-evidently the programmes themselves have to be relevant for the periphery, they have to be promoted in relevant regions and the conditions have to be attractive for the particular target group. In contrast, empirical studies on the innovation behaviour of Lower Saxon firms do not indicate that those would be structurally unable to successfully participate in centralized calls for applications. As noted above, SMEs in Lower Saxony’s more peripheral regions are weaker than the region’s larger enterprises and the type of innovative activities that they are pursuing is structurally less ambitious. Also, these issues are more pronounced than in some western German Länder. Most eastern German regions, however, are facing far more substantial issues in this regard (NIW, 2014a). Likewise, a similar case could be made for Länder as different as Bavaria, North Rhine-Westphalia and Saxony-Anhalt, yet not all of them have tended towards intra-regional redistributive innovation policy to quite the same extent. Arguably, a sub-regional level, redistributive policy design should be intensified in areas such as qualification in which it can be very effective (see above), yet not necessarily be pursued in regional innovation policy. Nonetheless, the Lower Saxon policy mix also harbours potentials. While its overall coordination and thrust may be less than optimal, it was precisely the constant preoc- cupation with less developed, more peripheral regions that has turned the region into a policy innovator, willing to experiment when it comes to the concrete design of location-based instruments suitable to address the needs and requirements of innovative

Regional Innovation Monitor Plus 2015 43

firms outside of the region’s core areas of strength (Brandt, 2011; MW, 2007a, MW, 2007b). The RIS3’s objective to work towards finding rural as well as urban solutions seems to reflect a commitment to continue this worthwhile endeavour. If these types of policy could be enabled by competitive selection processes at the regional level, rather than being confined to a redistributive funding scheme, their transformative power could well be substantial – both with a view to reducing regional disparities and in triggering entrepreneurial discovery in new domains. By and large, however, Lower Saxon policy will have to accept that they are working under the constraints of a medium-sized regional economy with only two to three areas of genuine, globally relevant specialisation. While it is wise to see these genuine poles of excellence funded from European, federal and industrial sources, regional policy-makers can still contribute to making these projects happen in their early stages or support surrounding efforts. Likewise, additional efforts can be made to integrate them with broader areas of the regional economy – for which close co-location is not necessarily a criterion. Instead of confining the reach of policies along tightly delineat- ed administrative districts, regional policy could still recognize that business networks do not only span those but also the borders of the region as such. For this, the INTERREG programme Netherlands-Germany has set a positive precedent over the years. Finally, new challenges will emerge with a view to the impending transformation of the automotive sector (lightweight vehicles, e-mobility, autonomous vehicles) as well as industrial production per se (Industry 4.0, Internet of things, additive manufacturing). Very likely, the overall positioning of many Lower Saxon firms and their current business models will change substantially in the course of the next decade. As in all other regions, new perspective efforts are needed to identify the key challenges resulting from this transformation and to join forces to address them in a satisfactory manner. To some extent, lighthouse initiatives like OHLF, the CFK Valley, the LZH as well as the Network Industry 4.0 are relevant steps in this direction. Clearly, however, more will be needed and appropriate steps will have to be taken in the course of this support period, notably before 2020. In summary, future orientations and opportunities for Lower Saxon innovation policy can be broadly outlined as follows: •! Prepare the economy for the impending industrial transformation In the years to come, Lower Saxony’s key economic basis, the automotive sector, will be challenged from multiple directions. Even if the potential for a transformation towards electric rather than fuel powered cars does not materialise, the incumbent automotive producers, including their supplier chain, will be substantially challenged. The most obvious challenges in this regard are new advances in lightweight production as well as systemic changes resulting from the introduction of self-driving, autonomous vehicles. In this regard, Lower Saxony’s major industrial players need to invest substantially into strategic research and, sooner rather than later, concrete product development. This, however, requires a transition in corporate culture and the recognition of a need for change in business models that is, usually, not easily achieved. Hence, the state, federal and regional level alike, will have a role to play in initiating and dynamising industrial change and to empower those willing to break out of existing path dependency. In Lower Saxony, the competences of several key initiatives and organisations can be leveraged to that end. •! Find ways to nurture new, emerging domains besides automotive Additionally, it is clear that – as the very consequence of the impending systemic changes to the automotive industry – regional economic policy needs to hedge risks, reduce vulnerability to the impact of a potential shift in automotive supply chains and create opportunities for alternative domains of excellence. As the regional innovation strategy illustrated, the Lower Saxon economy provides several technological starting points for this endeavour and past experiences have shown that regional SMEs can capitalise on new types of business opportunities both on their own and collectively.

Regional Innovation Monitor Plus 2016 44

Quite obviously, the region would benefit if “processes of discovery” between its latent champions could be orchestrated. Importantly, the need for action that policy papers identify in the SME sector should not obscure the fact that no small number of medium-sized firms in Lower Saxony are in fact quite competitive. Also, efforts need to be made to sustain the competitiveness in traditional industries which, up until today, remain quite important if not for growth then for employment and value creation in the Lower Saxon regional economy. Finally, the impending transition of large parts of the industrial sector that may result from new business opportunities created in the context of the digitisation of the industrial sector (Industry 4.0) as well as a larger role of additive manufacturing (3D-printing) should be consciously monitored. As in other regions Lower Saxon businesses will be affected and have to actively respond. •! Find new and better ways to address regional disparities The current approach towards addressing intra-regional disparities can be considered less than optimal with a view to administrative efficiency and at the same time somewhat at odds with the idea of supporting the creation of strong self-supporting domains that help to balance inequalities and concentration in the regional economy. Arguably, the current policies' implicit premise, that many of the region’s SMEs need support of capacity building before they can even hope to engage in regional level competitions, is difficult to maintain with a view to the empirical data. Examples from the Weser-Ems area and other peripheral regions in Lower Saxony document that medium-sized firms from the periphery can in fact be quite successful. Potentially, future regional innovation policy could focus more on the provision of opportunities to nurture new pockets of expertise in peripheral regions, rather than a priori assume that these are only susceptible to low-threshold innovation and innovation capacity building. That is not to say, however, that intra-regional differentiations are per se misguided. In the field of qualification, for example, location-based approaches on the level of districts can be decisive in enabling new pockets of excellence in the first place and in accompanying the growth of those already existing (see good practice above). At the same time, they are useful to counter out-migration from socio-economically challenged regions. Thus, future economic and industrial policies could profit from a clearer reflection of the relation between certain political ends and the most appropriate territorial level of intervention in that specific context.

Regional Innovation Monitor Plus 2015 45

Appendix A!: Bibliography

1.! Brandt, T. (2011): Regional Innovation Report Lower Saxony for the Regional Innovation Monitor, to the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility In- dustries. 2.! MW - Niedersächsisches Ministerium für Wirtschaft, Arbeit und Verkehr, (2007a) Operationelles Programm für den europäischen Fonds für regionale Entwicklung (EFRE) im Ziel „Regionale Wettbewerbsfähigkeit und Bes- chäftigung“ Förderperiode 2007-2013. Available at http://www.mw.niedersachsen.de 3.! MW - Niedersächsisches Ministerium für Wirtschaft, Arbeit und Verkehr, (2007b) Operationelles Programm für den europäischen Fonds für regionale Entwicklung (EFRE) im Ziel „Konvergenz“ Förderperiode 2007-2013. Availa- ble at http://www.mw.niedersachsen.de 4.! NBank 2015: Informationsposter EU-Förderung http://nbank.de/medien/nb- media/Downloads/Publikationen/ESF-EFRE-Produktbrosch%C3%BCren/ Informationsposter_EU-F%C3%B6rderung_Nds_2014-2020-ESF-EFRE- ELER.pdf 5.! Amt für regionale Landesentwicklung Lüneburg (ARL-LG) 2015: Regionale Auftaktveranstaltung zur EU-Förderperiode 2014 – 2020; www.arllg.niedersachsen.de/download/98888/Richtlinien_im_Ueberblick.p df 6.! Niedersächsische Staatskanzlei (Lower Saxon State Chancellery), 2014: Re- gional- und Strukturpolitik der EU im Zeitraum 2014-2020 – Niedersäch- sische regionale Innovationsstrategie für intelligente Spezialisierung (RIS3). Niedersächsische Staatskanzlei, Hanover. 7.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, (2008) For- schung, experimentelle Entwicklung und Innovationen in der niedersäch- sischen Wirtschaft. Analyse von ausgewählten Innovationsindikatoren für das Niedersächsische Ministerium für Wirtschaft, Arbeit und Verkehr. Available at http://www.niw.de 8.! NIW – Niedersächsisches Institut für Wirtschaftsforschung and Prognos (2010): Endbericht zur Sonderuntersuchung zu den Regionalisierten Teil- budgets, im Rahmen der ESF- und EFRE-Begleitforschung in Niedersachsen, für das Niedersächsische Ministerium für Wirtschaft, Arbeit und Verkehr, Juli 2010. 9.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, (2010) Regional- bericht Norddeutschland 2010. Aktuelle wirtschaftliche Entwicklungen in den Regionen von Schleswig-Holstein und Niedersachsen, in den angrenzenden Hansestädten sowie in den 16 Bundesländern, Hanover, NIW. 10.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, (2011) Forschung und Entwicklung, Innovationen und Wirtschaftsstruktur: Niedersachsen im nationalen und internationalen Vergleich. Analysen von ausgewählten Innova- tionsindikatoren für das Niedersächsische Ministerium für Wirtschaft, Arbeit und Verkehr. Authors: Birgit Gehrke, Ulrich Schasse, Christian Rammer (ZEW) with support of Mark Leidmann and Bernd Kreuels (Stifterverband Wissenschaftsstatistik). NIW, Hnnover. 11.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, (2014a) Stärken- Schwächen-Analyse (SWOT) für das Land Niedersachsen und seine Regionen, Teil 1: Sozio-ökonomische Analyse. Gutachten im Auftrag der Niedersäch- sischen Staatskanzlei. Authors: Alexander Cordes, Birgit Gehrke, Friederike von Haaren, Mario Reinhold and Ulrich Schasse. NIW, Hanover. 12.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, (2014b) Ba- sisanalyse zur Identifizierung spezifischer Handlungsbedarfe für fünf Re- gionen in Niedersachsen Teil A: Erläuterung des Vorgehens und landesweite Betrachtung. Gutachten im Auftrag der Niedersächsischen Staatskanzlei. Au-

Regional Innovation Monitor Plus 2016 46

thors: Daniel Schiller, Sissa Carlsson, Alexander Cordes, Mario Reinhold und Ulrich Schasse with support of Immo Böke, Maren Gollan, Kai Ingwersen, Lu- kas Häfner, Miriam Richter-Tokar and Björn Zucknik. NIW, Hanover. 13.! NIW – Niedersächsisches Institut für Wirtschaftsforschung, Fraunhofer Insti- tut für Systemtechnik und Innovationsforschung ISI, Wissenschaftsstatistik im Stifterverband für die deutsche Wissenschaft WSW, Zentrum für Eu- ropäische Wirtschaftsforschung ZEW, (2004) Forschung, Technologie, Inno- vationen und Wirtschaftsstruktur. Herausforderungen für die Niedersäch- sische Technologie- und Innovationspolitik, Hanover, NIW. 14.! NORD/LB 2014: Die 100 größten Unternehmen in Niedersachsen 2013. Nie- dersachsen Report, November 2014. NORD/LB Regionalwirtschaft, Hanno- ver. 15.! NORD/LB 2015: Niedersachsen Special – 4. Juni 2015, Konjunkturausblick Niedersachsen, NORD/LB Regionalwirtschaft, Hannover. www.nordlb.de/ filead- min/redaktion/analysen_prognosen/regionalanalysen/niedersachsen/2015/ Niedersachsen_Special_04062015.pdf 16.! Rammer, C. (2007) Monitoring and analysis of policies and public financing instruments conducive to higher levels of R&D investments. The “POLICY MIX” Project. Country Review Germany. Available at ec.europa.eu/invest- inresearch/ pdf/...en/germany.pdf 17.! Steria Mummert Consulting, Prognos AG, NIW, genderbüro, (2010) Halbzeit- bewertung der Interventionen des Europäischen Fonds für Regionale Entwicklung im Land Niedersachsen in der Förderperiode 2007-1013 im Auftrag des Niedersächsischen Ministeriums für Wirtschaft, Arbeit und Verkehr.

Appendix B!: Stakeholders consulted

1.! PD Dr. Daniel Schiller, Lower Saxony Institute for Economic Research (NIW) (20 November 2015). 2.! Gunnar Merz, Managing Director / CEO, CFK Valley Association, Stade, (27 November 2015). 3.! Univ.-Prof. Dr.-Ing. Prof. h. c. Klaus Dilger, Director, Open Hybrid LabFactory, Chair of, Institute for Joining and Welding, TU Braunschweig (7 December 2015) 4.! Dr. Maik Plischke, Lower Saxony Centre for Innovation, Managing Director, (7 December 2015) 5.! Dr.-Ing. Torben Seemann, Fraunhofer Project Centre WOB, Managing Director, (8 December 2015)

Regional Innovation Monitor Plus 2015 47

technopolis |group| Belgium Avenue de Tervuren 188a B-1150 Brussels Belgium T +32 2 737 74 40 F +32 2 727 74 49 E [email protected] www.technopolis-group.com