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Panorama of the Manufacturing Industry of the Czech Republic 2017 Isbn 978-80-906942-5-5 Minister of Industry and Trade Introductory Note

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Panorama of the Manufacturing Industry of the Czech Republic 2017 Isbn 978-80-906942-5-5 Minister of Industry and Trade Introductory Note PANORAMA OF THE MANUFACTURING INDUSTRY OF THE CZECH REPUBLIC 2017 ISBN 978-80-906942-5-5 MINISTER OF INDUSTRY AND TRADE INTRODUCTORY NOTE INTRODUCTORY NOTE BY THE MINISTER Dear readers, As Minister of Industry and Trade, it gives me a great pleasure to write a few words for the twenty-first edition of the “Panorama of the Manufacturing Industry of the Czech Republic”. It has been prepared by the Ministry of Industry and Trade in close cooperation with the Czech Statistical Office and with the contribution of the Ministry of Agriculture, the Confederation of Industry and selected sectoral associations. The publication describes individual branches of the Czech manufacturing industry. It has been prepared in a breakdown into groups of CZ-NACE activity classification and foreign trade classification with CZ-CPA commodities. It aims to provide readers with an overview of the current situation in individual industries and their sectors. It covers the period 2008–2017. In 2017, the performance of the Czech economy continued to gain strength while boosted by positive expectations of both households and businesses. Confidence indicators reflected general expectations in terms of growing production and investment activity, which were fulfilled despite the rising labour market tensions. High economic activity was also beneficial for households, which benefited from accelerating wage growth and were not afraid to spend. Foreign demand also had a share in balanced development and its growth was reflected in the results of the external sector, which contributed to a higher economic performance by the year-on-year improvement in the positive balance of foreign trade in goods and services. In the national economy, gross domestic product grew by 4.3% year-on-year and extended the growth to the fourth consecutive year. As in the previous three years, the main source of expenditure was domestic demand, which saw a stable consumption growth, strengthened by impact of investments. Households spending has been continuously increasing since the beginning of 2013 and culminated last year by 4.3% year-on-year growth. In 2017, the industrial production continued to grow for the fourth year in a row and showed 6.5% year-on-year increase. Also this year, when we commemorate the 100th anniversary of the establishment of independent Czechoslovakia, the industry has retained its privileged position in our economy, which is exceptional on European scale. The long standing tradition of industrial production often opens doors for our entrepreneurs to new foreign markets. But there is still much to be done to rank among the global industrial leaders. The Government and the Ministry of Industry and Trade committed themselves to do their best to enhance the business environment and simplify the business conditions as much as possible. Digitization must be applied wherever needed and all the tedious repetitive tasks must be fully automated. Entrepreneurs, as well as the general public, need electronic, modern and clear communication with public administration. We are also preparing a strategic investment plan to further expand and improve our infrastructure and measures to be taken in order to increase our competitiveness. Dear readers, I believe that this publication, which is unique by providing manufacturing industry data structured by branches, will be an important and useful source of information for your needs. There is none other well- arranged statistical overview available in the Czech Republic than this one, and many years of experience show that such a publication is in great demand and use. The Panorama of the Czech Manufacturing Industry, accompanied by an interactive viewer of economic indicators on the Ministry’s website, provides the professional public both in the Czech Republic and abroad with the results in individual branches of the manufacturing industry over the last period while offering the opportunity to present the achievements of individual sectors on an international scale. I hope you enjoy reading it. Ing. Marta Nováková Minister of Industry and Trade 3 PRESIDENT OF THE CONFEDERATION OF INDUSTRY INTRODUCTORY NOTE INTRODUCTORY NOTE OF THE PRESIDENT Dear Readers of the Panorama, Industry is a crucial sector for our economy and for the whole Czech Republic, which has been experiencing economic growth for the fifth year in a row. 2017 was a particularly record year for the Czech economy, when business grew across industries and so did corporate revenues, nominal values of contracts as well as salaries and wages that were accompanied by rising input prices and the overall growth of price levels. The positive effects of the economic boom implying a high GDP growth in 2017 showed themselves in multiple fields. The most visible one is low unemployment, which is good news for employees, but less good for employers, especially for those who face an acute shortage of employees, being a barrier to further growth. That is why in some cases, businesses have to reject new orders. Economic growth and high employment imply a higher tax collection and a higher amount earned from social security premiums. In this way, economic policy makers can increase public salaries, index pensions, and generally increase spending. We agree with these objectives, but this increased spending will need to be financed even in the future when the economy may not see so much growth and the tax collection may not be so dazzling. The State should also think about and support the business environment as a source of added value. Good economic development in 2017 gave companies and the State the means and opportunity to invest. Employers and the State must not miss this opportunity. The uncompromising market pushes companies towards innovation and streamlining of production and all processes. If companies do not do so, they can go bankrupt or disappear from the market. I’m glad to see positive numbers on the value of investments last year, but we still have space for improvement. We need long-term investments linked to innovation. Innovation is vital and we are trying, for example, to raise awareness among companies about the possibilities of the digital economy and the reality facing many companies in the world and in the Czech Republic. New orders should definitely not be taken for granted. As entrepreneurs, we must be able to deal with a number of obstacles. Affecting our export-oriented policy, the koruna appreciated, and although the interest rates remained low, they started growing. In a number of industries, wage growth already exceeds productivity growth. The price of oil has not dropped. The European economy is not growing at a dizzying pace, but we are still able to maintain our market share and successfully export. However, we are facing challenges associated with the ability to respond to the most up-to-date trends based on data and individualisation of production, which lead to an increase in labour productivity. Technologies such as artificial intelligence, virtual and augmented reality or blockchain are already finding their way to companies and their development can be very fast. In order to succeed, we also need a stable and supportive environment. That is why businesses and citizens must constantly encourage their Government to try to solve existing problems and look into the future. We should ask, as well as many years before, how to ensure faster completion of the motorway network (because transport is the blood of the economy), when there will there be sufficient coverage by high-speed Internet (because the flow of data is unconditionally important for today’s economy and the importance of this factor will continue to grow), when the State administration will be digitized, at least at the level allowed by current progress (effective digitization saves time and money for the State and its inhabitants) and when we will finally start using euro in our open and export-oriented economy. Ing. Jaroslav Hanák President of the Confederation of Industry of the Czech Republic 4 PRESIDENT OF THE CZECH STATISTICAL OFFICE INTRODUCTORY NOTE INTRODUCTORY NOTE OF THE PRESIDENT Dear readers, The publication of the Panorama of the Manufacturing Industry, the latest issue of which you have on your hands now, is one of the most traditional analytical outcomes. The current issue brings detailed information on the development of respective industries, compiled by the Ministry of Industry and Trade on the basis of statistics from the Czech Statistical Office and other data sources, already for the twenty-first time in a row. As in previous years, the overall picture is positive. The year 2017 was an extremely successful one for the Czech industry. The industry growth was supported not only by foreign demand, yet also by domestic one. Current data of national accounts confirm that the manufacturing industry still remains one of the main instigators of the domestic economy growth and gives work to approximately 1.3 million employees. The gross value added the manufacturing industry generated rose by respectful 10.5%, year-on-year, in 2017, and the industry thus became an unrivalled driving force of the domestic economic growth. Results of short-term sectoral statistics show that the total industrial production increased by 6.5% in 2017, while it was right the production of the manufacturing industry that grew (+7.0%). The current situation is a climax of a long-term development. The production growth rate of the manufacturing industry was the highest in the last six years, by 11.3% higher compared to that in 2015, and even more than a third higher compared to that in 2010. In 2017, among the most successful economic activities, which contributed most to the growth of the manufacturing industry, there were the manufacture of motor vehicles, trailers and semi-trailers with a growth of 9.6% that was by far the most important, followed by the manufacture of fabricated metal products (+8.3%), manufacture of machinery and equipment (+8.8%), manufacture of rubber and plastic products (+8.0%), and manufacture of electrical equipment (+8.3%).
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