Contract No. 2008.CE.16.0.AT.020 concerning the ex post evaluation of cohesion policy programmes 2000‐2006 co‐financed by the European Regional Development Fund (Objectives 1 and 2)

Work Package 4 “Structural Change and Globalisation”

CASE STUDY

STYRIA (AT)

Prepared by: Christian Hartmann (Joanneum Research, AT)

for: European Commission, Directorate General Regional Policy Policy Development Evaluation Unit

CSIL, Centre for Industrial Studies, Milan, Italy Joanneum Research, Graz, Austria Technopolis Group, Brussels, Belgium

In association with Nordregio, the Nordic Centre for Spatial Development, Stockholm, Sweden KITE, Centre for Knowledge, Innovation, Technology and Enterprise, Newcastle, UK

Case Study – Styria (AT)

Acronyms

CIS Community Innovation Survey DG REGIO Directorate General for Regional Policy EAGGF European Agricultural Guidance and Guarantee Fund EC European Commission ERDF European Regional Development Fund ESF European Social Fund EU European Union FDI Foreign Direct Investment FIFG Financial Instrument for Fisheries Guidance GDP Gross Domestic Product GIA Gender Impact Assessment ICT Information and Communication Technology LFS Labour Force Survey NDP National Development Programme NGO Non‐governmental Organisation NTI New Technologies of Information OECD Organisation for Economic Co‐operation and Development PPS Purchasing Power Standard RTDI Research, Technological Development and Innovation R&D Research and Development SME Small and Medium Enterprise SPD Single Programming Document TOR Terms of Reference WP Work Package

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Table of contents

Executive summary 1 Introduction 5

1. Structural change and globalisation in perspective 7 1.1 The region at a glance 7 1.2 Searching for the roots of change: socio‐economic history of the region 10 1.3 Regional structural change and globalisation issues in 2000‐2006 12

1.3.1 Dimensions of structural change 12

1.3.2 Understanding the geography of structural change 20

2. Regional policy 2000‐2006: strategy and objectives 23 2.1 Regional policy mix for structural change and globalisation 23 2.2 Overall strategy of the 2000‐2006 Objective 2 Programme 25 2.3 Selected fields of intervention and measures 27

3. Effects of the selected ERDF measures on the process of structural change and adaptation to globalisation 33 3.1 Assessment of the structural and socio‐economic effects 33

3.1.1 Performance of selected measures 33

3.1.2 Contribution of selected measures to structural change and globalisation 40 3.2 Assessment of the effects on institutional capacity and policy learning 53

4. Conclusions: key findings and main message 55 5. Annexes 59 5.1 Statistical tables 59 5.2 List of references 65

5.3 List of persons interviewed 67

III Case Study – Styria (AT)

List of tables

Table 1.1 ‐ Regional performance in comparative perspective (NUTS2) ‐Basic data, population 1995, 2000 and

2006 8

Table 1.2 ‐ Employment by sector on NUTS21 level in comparison to Austria and EU15, 2000 and 2006 8

Table 1.3 ‐ Regional performance in comparative perspective (NUTS2) 9

Table 1.4 ‐ Regional specialisation, Employment by sector (NUTS2) 13

Table 1.5 ‐ Regional specialisation, Gross Value Added by broad economic sectors (NUTS2) 14

Table 1.6 ‐ Innovation potential (NUTS2) 18

Table 1.7 ‐ Innovation potential (NUTS2) 19

Table 1.8 ‐ Geography of structural change (NUTS3) 21

Table 1.9 ‐ Overview on Clusters within Styria 22

Table 2.1 ‐ Synoptic view of the Objective 2 Programme 26

Table 2.2 ‐ Measures relevant to structural change and globalisation: main features 30

Table 3.1 ‐ Measure 1.1 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2005) 34

Table 3.2 ‐ Measure 1.1 ‐ Comparison of selected planned and realised material and socioeconomic indicators

(initial planning until 2005) 34

Table 3.3 ‐ Measure 1.3 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2006) 35

Table 3.4 ‐ Measure 1.3 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2006) 36

Table 3.5 ‐ Measure 2.1 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2005) 37

Table 3.6 ‐ Measure 2.1 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2005) 37

Table 3.7 ‐ Measure 2.2 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2005) 38

Table 3.8 ‐ Measure 2.2 ‐ Comparison of selected planned and realised financial and material indicators

(initial planning until 2005) 39

Table 3.9 ‐ Measure 1.3 ‐ Allocation of projects 43

Table 3.10 – Allocation the costs in Measure 1.3 according to NACE sectors (%) 44

Table 5.1 ‐ Taxonomy of objective 2 eligible areas (NUTS3) 59

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Table 5.2 ‐ Regional performance in comparative perspective (NUTS2) ‐Basic data 59

Table 5.3 ‐ Socio‐economic change and human capital (NUTS2) 60

Table 5.4 ‐ Regional specialisation (NUTS1) 61

Table 5.5 ‐ Innovation potential (NUTS2) 62

Table 5.6 ‐ Geography of structural change (NUTS3) 62

Table 5.7 ‐ Geography of structural change (NUTS3) 63

Table 5.8 ‐ Geography of structural change (NUTS3) 64

V Case Study – Styria (AT)

List of figures

Figure 1.1 – Structural Funds: eligible areas in Styria 2000‐2006 7

Figure 1.2 – GRP per capita at current prices, changes between 1995‐2005 9

Figure 1.3 ‐ GVA, produced by the manufacturing sector in Styria in 2004 14

Figure 1.4 ‐ Distribution of product and process development by company size in Styria 1998‐2000 16

Figure 1.5 – Distribution of companies by NACE sectors (%) in the eligible areas of Styria 2000‐2006 17

Figure 1.6 ‐ Distribution of the Innovation potential by size of firms between 1998‐2000 (NUTS2 Styria) 19

Figure 3.1 ‐ Location of impulse centres supported by ERDF according to the technology focus in Styria 47

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Styria case study

Executive summary

Scope and research methods

This report has been prepared in the framework of the ex post evaluation of cohesion policy programmes 2000‐2006 co‐financed by the European Regional Development Fund (Objectives 1 and 2). It is part of the Work Package 4: Structural Change and Globalisation. This case study focuses on analysing the results and outcomes of a set of specific measures of the ERDF 2000‐ 2006 Objective 2 programme implemented in the Styria region and considered particularly relevant in the context of structural change and adaptation to globalisation: Measure 1.1 was intended to broaden the industrial base and to build new regional sectoral strengths by attracting highly innovative firms to the region; Measure 1.3 aimed at strengthening the competences of existing and new start‐up SMEs; Measure 2.1 intended to improve the production system by the promotion of networking; Measure 2.2 aimed to increase the innovation potential in the region, by supporting technology transfer, diffusion of scientific, technological and industrial knowledge and/or the commercialisation of regional research activities. The study is based on various information sources: an in‐depth analysis of available documents (programming documents, programme complement, annual implementation reports, mid‐term and final evaluations, regional studies); monitoring data of the programme; on‐site interviews with regional authorities, representatives of the state bodies in the region and with final beneficiaries of the specific measures under review, including companies; as well as data from the Austrian statistical office (STATAT) and Eurostat.

Key research question and hypothesis tested in the case study

The main research question addressed by this case study is the extent to which regional policy measures, co‐ financed by the ERDF (European Regional Development Fund), supporting structural change and adaptation to globalisation1 have helped on the one hand to foster the sectoral diversity in more technology oriented niches and on the other hand to increase industry science cooperations in the eligible areas of Styria (Austria). In particular, did the ERDF support lead to a sound development of the automotive industry as promising new sector allowing Styria to catch up in regional economic growth and employment? Given the emphasis of the programming document, the case study focuses on three specific types of measures that have been supported: attraction of new firms to the region, the modernisation of enterprises, innovative new business parks and the promotion of collaborative R&D projects. The assessment of the effects of the selected ERDF measures aims to highlight the contribution of the Objective 2 programme to structural change in the region, and in doing so tests three of the working hypotheses proposed in the conceptual model developed by the study. Firstly regional specialisation is

1 By measures “supporting structural change and enabling adaptation to globalisation”, the study refers to public intervention to promote the reallocation of resources (labour and capital) towards more efficient ends, either directly (e.g., promoting start ups, or favouring SMEs’ technological intake) and/or indirectly, by minimising possible adverse effects of structural change.

1 Case Study – Styria (AT)

addressed: The spatial concentration of economic activities and possible externalities of agglomeration have to be taken into account in this regard. Problems of structural change and vulnerability to globalisation are frequently a consequence of lock‐in effects and negative selection mechanisms that slow down the necessary change and restructuring Secondly the production system is under scrutiny: regional production systems are embedded in the regional firm structure and labour markets. The lack of strong local supply‐chain linkages and of intra‐industry collaborative modes between large firms and SMEs may hinder the speed of new technology adoption and the spread of flexible modes of production. Thirdly the innovation potential is analysed: apart from significant differences among Objective 2 regions in terms of institutional thickness, the innovation systems of Objective 2 regions may suffer from missing innovation drivers on the demand side. Barriers to innovation are determined by a lack of absorptive capacity of local firms.

Regional context and key findings

Styria is the second largest of the nine Austrian regions, covering 16,388 km², with the population of 1,202,303 in 2006, corresponding to 15 % of the population of Austria. Between 2000 and 2006 the Styrian Objective 2 region was by far the largest in Austria. In the past, Styria had been to a large extent an industrial region, specialised in steel and iron industry. The issues of tackling structural change and internationalisation were of high relevance in Styria at the beginning of the programming period, since Styria has been confronted with massive structural problems since the beginning of the 80s. The 1980s and the beginning of the 1990s were characterized by a low level of growth of the regional output, a tightened labour market and structural problems such as an insufficient rate of firm foundations and the concentration on the less knowledge intensive, but resource intensive steel and iron industry. The regional specialisation in these low technology industry sectors lead to an increased vulnerability of the regional economy to exogenous shocks. Beginning in the 1990s, several changes reshaped the relevant economic environment: Through the opening of the Centre and Eastern Europe and the integration of Austria into the EU, Styria suddenly found itself in the heart of Europe, and thus started to attract foreign direct investments. These changes also proved challenging for Styrian firms. While the evolution of the European economy provided new opportunities, it also required continuous adaptation in order to remain competitive. Firms needed to learn to collaborate and to develop potential for innovation as a strategic resource. The regional economy of Styria rose to the new challenges. After the 1990s, big firms were reorganised and broken up into smaller parts, new applied research institutions were established, technology parks founded, and regional development and financial support programs became more innovation oriented. Once Obersteiermark succeeded in implementing critical structural change in specific industries, economic growth in Styria has remained unbroken since the mid 1990s With these problems and challenges in mind, the Styrian Government elaborated its own regional development strategies since 1993. Styria was an “early mover” with respect to regional development strategies in Europe. The actions undertaken by the regional government since the 90`s focused strongly on economic restructuring and promotion of the strengths of Styria. The Economic Strategy of Styria and the Technology Policy Concept form the basis for programme funding by the European Regional Development Fund for the period 2000‐2006.

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In conclusion, we draw attention to the following key findings:

ERDF interventions were successfully addressing problems of regional specialisation and induced a shift to new innovation driven sectors

Styria showed in the past characteristics of an ‘old industrial area’, dominated by an industrial monostructure of sectors such as metal manufacturing; the region was thus extremely vulnerable to exogenous shocks. The reorientation towards a sectorally diversified regional economy and to knowledge intensive niches was the paramount challenge for the regional economic development of Styria. ERDF funded projects played in the period 2000 to 2006 an important role in supporting the development of new regional value chains centred around the automotive industry and its supplying sectors (like machinery, electronics etc.). The projects funded in this period have led to new patterns of regional specialisation with a more technology oriented profile. Overall the ERDF measures have contributed to a shift towards new innovation driven regional specialisations, but were focused so far more on building support institutions and physical infrastructure than on direct job creation.

ERDF interventions were able to stimulate an adequate response to structural change challenges arising from the problem of inflexible regional production systems in the low technology sectors

Styria was characterised at the beginning of the programming period by significant differences in firm structure, by a lack of strong local supply‐chain linkages and intra‐industry collaboration, by obsolete production processes and by inflexible employees. The modernisation of the production systems took two different routes in Styria: Firstly, a shift from mass production towards flexible specialisation and secondly the reorientation to more collaborative patterns of production and stronger supply chain linkages. Broadly we consider that the activities funded under the ERDF programme 2000 to 2006 have had a positive effect on collaboration pattern of firms, and may suggest a beneficial outcome at regional level in terms of an improved production system, flexible business environmental and stronger intra‐business relations.

Structural funds did allow for a completely integrated planning approach, encompassing not only traditional domains of regional policy but also innovation, research and technology

Public interventions addressing structural change in Styria did have a long tradition going back more than 20 years. The region elaborated its own regional development strategies at the beginning of the 90´s , which built the basis for ERDF programme. In 2000 therefore there was enough room for an integrated planning approach ensuring greater coherence between all the different relevant policy domains, encompassing not only traditional domains of regional policy (i.e. spatial planning, infrastructure development, environment) but also innovation, research and technology. Nevertheless the positive effect of ERDF measures in Styria should be understood as part of a long‐term process rather than solely as the outcome of a single programme. Looking at the evidence collected in this case study, the following elements can be seen as strengths of the Objective 2 Programme in Stryia: multi‐sectoral programming, more professionalism in the sense of improved evaluation, monitoring and a stronger systematisation of support procedures. In addition

3 Case Study – Styria (AT)

ERDF funding, is to be seen as an increasingly important source of funding for fostering structural change in the region further on.

Main message

The case study has examined four measures funded under Priority 2 of the 2000‐2006 Objective 2 Programme, considered to be the most relevant in assessing the contribution of the programme to structural change. These were tested in relation to three of the five hypotheses outlined in the conceptual framework underpinning the research project, broadly concerning ‘regional specialisation’ ,‘production‘ system and ‘innovation potential’. All three hypotheses tend to be validated by the evidence collected in this case study. According to the several dimensions of structural change, first of all the regional specialisation, secondly the production system and thirdly the regional innovation potential have been of high relevance in the case of Styria. Structural change was in Styria associated with a shift in sectoral specialisation: Firstly with a further shift from industrial monostructures towards sectoral diversity, secondly towards the service sector, and thirdly with a shift from less to more knowledge intensive companies. As for the modernisation of production systems in Stryia further efforts to increase the collaboration between regional companies and for closing the gap in the supply chains – mainly in the automotive sector‐ seemed to be the most effective way. Innovation potential in Styria has been characterised by a strong concentration of innovation activities on a few firms compared to a majority of SMEs in the productive sector, which have not caught up yet regarding innovation in‐ and output. The gradual extension of the innovation base, i.e. in gaining the attention of companies (especially SMEs) who have so far not shown any interest in being part of technological innovation processes was thus an actively pursued strategy. Generally it might be concluded that the selected measures were successful in term of planned number of projects, quite effective in terms of attaining socioeconomic objectives with respect to the labour market. One of the marrow roles of ERDF in Styria was the complementary support to regional development programme for fostering structural change. ERDF accented the regional strategies and contributed positively to changing in sectoral specialisation, modernisation of production process and improve the innovation capacity of Syrians companies.

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Introduction

The issues of tackling structural change and internationalisation were of high relevance in Styria at the beginning of the programming period, although Styria was confronted with massive structural problems already in the 80s. In the past, Styria has been to a large extent an industrial region, specialised in steel and iron production. Restructuring of the economy began in the 80s with new companies settling in the region and older ones modernizing themselves. After tremendous changes in its economic structures since the 1980s, first of all, the question of regional specialisation in terms of renewal of the regional firm base had needed to be addressed. Second, the further efforts would be needed to close the gap in the regional supply chain and foster collaborate production systems. Third, the further development of the regional innovation potential of SMEs was paramount, although diversification of the regional industry base led to a strong basis of innovative large firms and less innovative SMEs, the knowledge diffusion and cooperation pattern are rare. The following case study will show, how regional policy and in particular ERDF programming replied in Styria in the period 2000 to 2006 to these challenges? What kind of quantitative and qualitative evidence of the effects of these relevant policy interventions were assessed? The case study is divided into four sections: Section 1 provides firstly a brief introduction of the region in focus based on a discussion of basic indicators such as regional income, population and employment. Second, the roots of structural change are explored and  going back in history into the 19th century  the causes of the region’s initial success and later downturn are discussed. Third a discussion of relevant dimensions of regional structural change for the period 2000 to 2006 is presented based on statistical indicators for regional economic structure and R&D and innovation performance. Based on the three main challenges described above three working hypotheses are formulated, addressing the lack of new firm formations, the need of collaboration by production system, and the lack of industry‐science co‐operation. Accordingly, dimensions of structural change the issues of economic development, regional specialisation, production systems, regional innovation potential and of the geography of structural change are discussed. Section 2 sheds then the light on regional policy and its strategies, objectives and instruments for the programming period 2000 to 2006. After brief discussions of the pertaining regional policy mix and the overall strategic outline of the programme, the measures with relevance for the dimensions of structural change and globalisation are presented. First, the development approach of the programme strategy between 2000‐2006 is discussed in relation to the relevant measures. Next, further analysis for the selection of four measures is done. The measures have been selected in the light of the working hypotheses established in section 2, thus they have been selected according to their potential to contribute to the renewal of the regional firm base, their effect on closing the gap in the supply chain especially in the automotive industry and the fostering of industry science co‐operations. Finally the selected measures are discussed while giving information on the respective intervention logic, the concrete instruments applied, and the beneficiaries addressed. Section 3 provides a detailed discussion of each selected measure. First, the measures are discussed on basis of available monitoring data, giving insights into the performance, the leverage effects in relation to induced total and private investments. Also a discussion of output indicators that have been collected in the course of

5 Case Study – Styria (AT)

the programme monitoring is included, giving insights into supported project numbers, reached number of new jobs and geography allocation of the supported projects. Second, the measures are discussed and assessed on the basis of the complementary field work. Third, effects on institutional capacity building and policy learning are discussed on a qualitative level. The qualitative discussion of the effects of the measures is as far as possible complemented by regionalised data in order to provide comparable quantitative evidence. In particular the following data sources have been used: • Regionalised data on permanent business establishments according to NACE sectors and firm formation rates were supplied from WIBIS STEIERMARK 2008 (Politico‐economic Reporting and Information System, Styria). • Regionalised data on innovation activities of firms have been provided by the STATISTIK AUSTRIA and CIS‐3 (community innovation survey). • Complementary qualitative information has been collected in 11 interviews with beneficiaries and 12 interviews with regional experts and policy makers. Section 4 draws conclusions from the collected findings addressing both the dimension of each measure but also of the whole programme.

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1. Structural change and globalisation in perspective

1.1 The region at a glance

Styria is the second largest of the nine Austrian regions, covering 16,388 km². The population (as of 2006) was 1,202,303 corresponding to 15 % of the population of Austria. In terms of population, Styria ranks fourth among the nine regions. Between 2000 and 2006, Styria Objective 2 region was by far the largest in Austria, with a spatial coverage of ca. 7,000 km2 and a population in 2000 of 660,773 inhabitants (4.5 % of the Austrian total). Styria encompasses six political districts and sub‐areas. The region has a number of centres with more than 10,000 inhabitants including Leoben, Kapfenberg, Bruck/Mur, Mürzzuschlag and Liezen. The Objective 2 region can be viewed as two sub‐regions: Obersteiermark, which comprises a reasonably coherent functional region, and the district of Voitsberg which is more closely linked in economic and infrastructural terms to the Styrian capital of Graz.

Figure 1.1 – Structural Funds: eligible areas in Styria 2000‐2006

Legend: yellow: phasing out regions, pink: objective‐2 regions, gray: Graz, surrounding area of Graz Source: http://www.ziel2steiermark.at/v2/en/index.php, list of eligible area, own illustration by GIS

7 Case Study – Styria (AT)

In the past, Styria was largely had been an industrial region, specialised in steel and iron industry. Restructuring of the economy began in the 1980`s with new companies settling in and older ones modernizing themselves. A high rate of business start‐ups, the creation of business clusters and investments in research infrastructures and R&D have all contributed to the economic growth. Between 1995 and 2000 a slight population decrease (‐0.26 %) was recorded in Styria, while between 2000 to 2006 there was a very slight increase. In this period the slight natural increase in population resulted in a rise in the average age of the population. Looking at the population of the Objective 2 regions, between 1995 and 2000, and between 2000 and 2006 contradictory regional changes can be observed. An average increase in population was observed in Süd‐Ost‐Weststeiermark (+3.0 %), while Obersteiermark an old industrial regions, has suffered a relative decline in population (0.46 % between 1995‐2000 and ‐1,28 % since 2000).

Table 1.1 ‐ Regional performance in comparative perspective (NUTS2) ‐Basic data, population 1995, 2000 and 2006

Regional National EU15

Indicator Unit ∆(%) ∆(%) ∆(%) 1995 2000 2006 1995 2000 2006 1995 2000 2006 00/06 00/06 00/06 Population Tsd. 1,186 1,182 1,203 1.7 7,943 8,011 8,282 3.4 373,362 377,734 390,681 3.3 Source: Core team processing of Eurostat data

In spite of a stagnating population, Styriaʹs total labour force has risen since 1995 (primary due to higher activity rates of women in employment). The problem of declining population was reinforced in the Eighties when some of the leading industries, such as steel, were hit by a severe crisis. In the region total employment grew on average by 1,2 % p.a. between 2000 and 2005, from about 512,000 in 2000 to 551,000 in 2005. This was higher than in the rest of Austria. The industrial sector employs the majority of the region’s workforce. The share of services lags behind the national average (47% in Styria, compared to 64 % national average). Between 1995‐2000, employment increased on average by 0.31 % in the production sector and 2.13 % in the service sector in Styria as a whole. Certain sub regions show even higher growth rates in employment in the production sector, up to nearly 2 %, but lower growth rates in the services sector. (See Table 1.2).

Table 1.2 ‐ Employment by sector on NUTS21 level in comparison to Austria and EU15, 2000 and 2006

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Agriculture % on total employment 8.3 7.9 ‐4.9 5.8 5.5 ‐5.1 4.3 3.6 ‐16.1 Industry % on total employment 34.0 31.3 ‐7.7 30.2 28.2 ‐6.8 28.9 26.6 ‐9.1 Services % on total employment 57.7 60.8 5.2 63.9 66.3 3.7 66.4 69.6 4.8 Source: Eurostat data, data collected in April of 2009

In contrast to the positive development in employment, Styria has faced very high unemployment rates since 1995. The unemployment in Styria amounted to 3.9 % in 1995‐ with substantial disparities within the region itself – and fell under the national average (3.2 %) in 2000. From 2000 the rate of unemployment rose continuously in Styria, from 17,3 % in 2000 up to 23.9 in 2005. However, young, long‐term unemployment has been decreasing in the last few years.

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Table 1.3 ‐ Regional performance in comparative perspective (NUTS2)

Regional National EU15

Indicator Unit ∆(%) ∆(%) ∆(%) 1995 2000 2006 1995 2000 2006 1995 2000 2006 00/06 00/06 00/06 GDP per Euro PPP 19,300 21,900 26,900 23 22,900 25,900 31,100 20.1 18,055 23,117 26,652* 15.3 capita Gross Euro mln Value 20,607 23,282 29,280 25.7 164,082 186,587 232,904 24.8 6,058,125 7,822,555 9,735,114 24.4 basic prices Added

Un‐ % unempl. employme people n.a 3.2 3.9 21.9 n.a 3.5 4.7 34.3 n.a. 8.3 7.8 ‐6 nt rate aged =; >15

* Data for 2005* Source: Eurostat data, data collected in April of 2009

Much of this decline is related to the crisis in the raw materials industry which is highly concentrated in the Objective 2 area. Extensive restructuring within nationalised industries in the mid 1990s also led to considerable job losses. Between 2000 and 2005 Styria showed the highest average regional domestic product (RDP) per capita growth rate compared to other Austrian regions, 13.5 % between 1995 and 2000 increasing to 23.8 % between 2000 and 2005. In 2000 the dynamic growth slowed down over the year both in Austria and in Styria. Between 2001‐2002 the economy of Styria even stagnated. But after 2002 especially in 2004 Styria had the strongest economic growth rate in Austria at 3.6% ‐ mainly due to the area of Graz ,which saw strong economic growth in this year and has continued to grow in economic and population terms since then.

Figure 1.2 – GRP per capita at current prices, changes between 1995‐2005

6.0%

5.0% year 4.0%

3.0% previous

to

2.0% change 1.0% %

0.0% 1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 Austria 3.6% 1.3% 3.9% 3.7% 5.2% 1.9% 1.9% 2.2% 3.6% 3.1% Sytria 4.4% 4.2% 3.5% 4.4% 5.1% 2.2% 0.0% 3.1% 4.7% 4.0%

Source: STATISTIK AUTSTRIA 2009, Regional accounts, gross regional products

9 Case Study – Styria (AT)

In the value added pattern of 1995, Styria was identified as one of four “industrial provinces”2. 33.8 % of GVA was produced by industry in total, with 24.9 % in the manufacturing sector, above national average. Between 1995 and 2000 the average value added growth rate was about 5 % and rapidly decreased between 2000 and 2006. Almost a quarter of the gross value added of the manufacturing sector is generated in the area of machinery (including automotives).3 The branches “motor vehicles”, “machinery and equipment” and the machinery sector can clearly be identified as the Styrian job‐engines. The machinery sector benefits from traditional competences in the field of materials and metals. 12 % of the Styrian GVA is generated in the field of basic metals and fabricated metal products. The average value added growth rate in the service sector was almost constant from 1995 up to 2006. But taken together, Styria was clearly distinct from the service‐centred economy of the more developed regions.

1.2 Searching for the roots of change: socio­economic history of the region

Since the 1950s economic trends in Styria have been shaped by resource intensive industries, making the region highly sensitive to cyclical fluctuations. From the middle of the 1970s the situation changed for the worse, and even in periods of upswing the Styrian economy barely hit average Austrian growths levels. Styria was confronted in the 1980s until the beginning of the 1990s with low levels of growth in regional output, a tightened labour market and structural problems such as an insufficient number of new firms. This gap in the growth rate was mainly caused by two factors. On the one hand there was the crisis of the steel industry in Obersteiermark, and on the other hand, the southern area suffered from poor resource endowment and low accessibility. The fact that it was also a border region located near Eastern Europe and relatively distant to developed western market economies made matters even worse. The problems of the steel industry in Obersteiermark turned out to be the major hindrance to economic development in Styria. Petrified clusters in old industrial areas are well known. Such clusters are characterised by dominant, large, vertically integrated firms, producing standardised goods at a late stage of their product cycle. Such was the situation during the 1970s and 1980s. Obersteiermark was dominated by large state owned firms that were highly vertically integrated and had lost their headquarter functions in the 1960s and 70s to Vienna. Plants in Obersteiermark thus had come under “external” control. In most cases, planning, R&D and marketing/distribution functions, i.e. those functions entailing the monitoring of markets and technology were lost (Tödtling/Sedlacek, 1997). Many firms thus lost their power to innovate and to cope with changes in the macro‐environment. Restructuring measures in Obersteiermark were often subject to delay (due to the fact that structural change is accompanied by the labour market reconstruction, the strong regional labour unions often retarded several restructuring processes) In the 1980s the Styrian government launched several SME policy programmes but did not feel responsible for the monostructured old industries. By the mid 1980s, a change in political attitude as well as in the problems prevailing in Obersteiermark prepared the ground for a more widespread restructuring process. This subsequently claimed a large number of victims in the labour market. (Geldner, 1998).

2 Beside Niederösterreich, Oberösterreich and Wien 3 The manufacturing sector is responsible for more than a quarter of the gross domestic product of Styria. 38 % of the Styrian RDP stems from the production sector.

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From the 1980s until the beginning of the 1990s the population stagnated in Süd,‐ Ost,‐ and Weststeiermark but clearly decreased in the industrial region of Obersteiermark (‐1,2 %). Regional output also decreased dramatically and the regional rate of unemployment rose. It seemed up to the early 1990s that no other sector of the Styrian economy would actually be able to compensate for such losses of output and employment. (Hartmann, 2003). Beginning in the 1990s, several changes reshaped the relevant economic environment: Through the opening of the Centre and Eastern Europe and the integration of Austria into the EU, Styria suddenly found itself in the heart of Europe, and thus started to attract foreign direct investments. These changes also proved challenging for Styrian firms. While the evolution of the European economy provided new opportunities, it also required continuous adaptation in order to remain competitive. Firms needed to learn to collaborate and to develop potential for innovation as a strategic resource. The regional economy of Styria rose to the new challenges. After the 1990s, big firms were reorganised and broken up into smaller parts, new applied research institutions were established, technology parks founded, and regional development and financial support programs became more innovation oriented. Once Obersteiermark succeeded in implementing critical structural change in specific industries, economic growth in Styria has remained unbroken since the mid 1990s. With these developments in mind, the regional government of Styria together with other regional actors, decided in 1993, before entering the EU, to develop a “Regional technology policy concept” (Steiner et al.1996). The technology policy concept will be used as a basis for further strategic orientation. Three different tasks were given priority: (Steiner et al. 1996: 40ff) • Regarding co‐operation, the intention is to reduce barriers by focussing on industrial clusters, creating synergy effects for the firms and providing a common infrastructure. • The strategy of improving absorption capacity and diffusion of new technologies aims to enforcing regional competitiveness, especially in the quality of goods and services and in productivity. • The orientation and qualification goal focuses on continuous adoption of new production technologies and on an innovation qualification of staff members. (Hartmann 1998).

As a result of the new regional policy Styria reorganised economic policy promotion in the form of an independent agency (Industrial Promotion Agency (SFG) founded in 1991) and attempted to create an automobile cluster in order to attract greater FDI to the region. The automobile cluster is an example of policy supported growth for a new industry in the region. Some elements had already existed (e.g. firms like Steyer‐Daimler‐Puch or AVL‐List), others were attracted in the 1980s and 1990s aiming at cluster formation in the region (Steiner and Hartmann 1999). The cluster employed approximately 10,000 people and comprises 100 companies (Holzschlag, 1997). Due to the cluster’s success, existing firms expanded, co‐ operation and specialisation increased and additional foreign investment was attracted. In spite of the dominance of the automobile cluster there was a strong sectoral concentration in other industries as well. Additional large industrial agglomerations in Styria include the branches “material and metals” with 30% of Styrian industrial sales, followed by “wood & paper” (20%), “construction & housing” (12.4%), “food” (11%) and “vehicles & transportation” (10%). Since the 1990s the growth of the economy has been accompanied by considerable changes in the structure of production and of exports. Growth of export markets has been mainly driven by the development of the auto industry and its supply chain, the electronics sector and the paper industry. (SPD Styria 2000‐206).

11 Case Study – Styria (AT)

Nevertheless, the manufacturing sector of Styria is still characterized by its low volume of export and the narrow basis of export products. Since 1995‐2000 the sectoral composition of Styrian industry has changes considerably: the large dominance of the primary sector (mining, glass, wood, iron and steel) has been reduced, sectors with final products (electronics, machines, electrical supply, motor vehicles) have been extended. Almost a quarter of the gross value added of the manufacturing sector is generated in the area of machinery (including automotives). The machinery sector has benefited from existing traditional competences in the field of moulding. 12% of the Styrian RDP is generated in the field of basic metals and fabricated metal products. The field of electronics and electrical engineering account for 13% of the Styrian RDP. Employment growth varies widely across sectors but has been exceptionally high in the industries like mining and energy as well as in the manufacturing sector (electronic machinery and equipment, fine mechanics and the automotive industry). There is still a lack of business services. A valuable indicator for a region’s economic progress and successful structural change is the growth of new firms. In terms of the percentage‐share of newly founded enterprises Styria has seen constant increases since 1995. According to OP 2000‐2006, 2,561 firms were founded between 1995 to 1998 in the Objective 2 area. (1,110 in Obersteiermark). In parallel to the support of the automobile cluster, as proposed in the Styrian Technology Policy Concept in 1995 (Steiner et al, 1995), emphasis was also put on the creation of infrastructure networks ,the creation of impulse centres, the founding of technology transfer facilities, and the support of young companies by training management and staff and facilitating start‐ups. In the structural funds period, between 1995‐1999 Styria participated in a variety of programs, such as e.g. Objective 2, Objective 5b, and in the most important community initiatives, such as INTERREG II, LEADER (RECHAR II promotes the economic restructuring of coal‐mining areas, RESIDER II subsidizes the economic restructuring of steel areas) Apart from the four community initiatives, the regional Objective 2 mainstream program had a significant role to play for the period from 2000 to 2006. In addition to a (later) detailed list of measures, it also comprises overall objective definitions and development strategies that are in line with the existing regional promotion policy. Compared to the period of 1995‐1999, the Objective 2 Programme 2000‐ 2006 focuses more on promotion of production and service sectors, promotion of local competitive advantage, and on “soft” measures for promoting network building and cooperation.

1.3 Regional structural change and globalisation issues in 2000­2006

1.3.1 Dimensions of structural change

1.3.1.2 Regional specialisation

As the conceptional model of the first intermediate report has showed, some Objective 2 areas are specialised in industries that suffer from severe external competition. The spatial concentration of economic activities and possible externalities of agglomeration have to be taken into account in this regard. Problems of structural change and vulnerability to globalisation are frequently a consequence of lock‐in effects and negative selection mechanisms that slow down the necessary change and restructuring. In this section evidence will be presented that Sytrian Objective 2 region is facing problems stemming from regional

12 Work Package 4: “Structural Change and Globalisation”

specialisation. Styria has a long tradition in metallurgy and steel production s (Tichy G 1997, Steiner M. et al. 1985, Hamm R. et al 1990). As an ‘old industrial area’, long‐dominated by a large nationalised industry, the region of Styria was subjected to several economic shocks. In the past Styria was specialized in sectors such as metal manufacturing where structural change proved to be particularly problematic since it implies plant closure, asset stripping and general “institutional unlearning” (Trippl et al. 2008, p. 208; Steiner 2006). Reorientation to regional specialisation also meant moving away from industrial monostructures (coal, iron and steel production) towards sectoral diversity and knowledge intensive niches (like electronics, automotive and technology services) (InTeReg 2005, Hartmann et al. 2006, Tödtling et al. 2004). Building upon regional competence in new technology oriented niches was one of the most advanced challenges for the regional economic development of Styria. Structural change at a sectoral level appears very often in the form of a change in the production systems (accompanied by technological upgrading). This could take different forms such as a shift from mass production towards flexible specialisation and niche markets. (InTeReg 2005, Hartmann et al. 2006, Tödtling et al. 2004).4 It is questionable in which Styrian economic sectors these developments are observable. If there was a shift from industrial monostructures towards the service sector, it should also have visible impacts involving shifts in the sectoral structure of employment. It can be easily seen that from the employment point of view the weight of service sectors has grown faster in Styria than in the rest of Austria (see Table 1.4). While the weight of industry in regional employment decreased between 2000 and 2006, it still remained higher than in Austria as a whole. The service sector has been responsible for the absolute growth in employment since 2000 in all Styrian provinces. The main share of the service sector can be found in Graz, Liezen and in the Western and Eastern Obersteiermark. Between 2000 and 2006 the service sector in Süd‐, Ost‐ and Weststeiermark grew the most dynamical in Styria. (Oststeiermark from 45.9 % in 2000 to 49.8 % in 2006, in West‐ and Südsteiermark from 48.6 % in 2000 to 51.3 % in 2006). Although services have been responsible for the absolute growth in employment since 2000, manufacturing has successfully maintained its position. In Styria more than a third of employment can be still found in the manufacturing sector. This development of the manufacturing sector has been driven mainly by the automobile sector. Styria displays a strong high and medium‐high technology focus in manufacturing, but is relatively short of the respective knowledge‐intensive services. In Styria in 2006 more than 31.7 % of employment was still based on industry, compared to 28.2 % in Austria and 26 % in the EU15.

Table 1.4 ‐ Regional specialisation, Employment by sector (NUTS2)

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Agriculture % on total employment 8.3 7.9 ‐4.9 5.8 5.5 ‐5.1 4.3 3.6 ‐16.1 Industry % on total employment 34.0 31.3 ‐7.7 30.2 28.2 ‐6.8 28.9 26.6 ‐9.1 Services % on total employment 57.7 60.8 5.2 63.9 66.3 3.7 66.4 69.6 4.8 Source: Core team processing of Eurostat data

4 InTeReg 2005 The technology policy concept of Styria, Graz; Hartmann Ch., Berger M. (2006) RIP Watch – Analysis of the Regional Dimension of Investment in Research; Case Study Report Styria, ERAWATCH Network asbl, Graz; Tödtling F., Trippl M. (2004) ‘Like a Phoenix from ashes? The renewal of cluster in old industrial areas’, Urban Studies, 41, pp. 1174‐1195.

13 Case Study – Styria (AT)

The reduced importance of Styrian industry is also visible in the decline of construction: in terms of value added, the percentage weight of construction fell by 5.2 % between 2000 and 2006, while in Austria the drop was 7.7 percentage points. Regarding gross value added, the biggest decline was recorded in agriculture (GVA 2000 to 2006, Styria: ‐14 %, in Austria ‐18 %). 42 % of Styrian gross value added was produced in the manufacturing sector.

Table 1.5 ‐ Regional specialisation, Gross Value Added by broad economic sectors (NUTS2)

Regional National Indicators Unit ∆(%) ∆(%) 1995 2000 2006 1995 2000 2006 00/06 00/06 GVA in agriculture, hunting, forestry and % on total GVA 3.9 3.1 2.6 ‐14.0 2.6 2.0 1.7 ‐18.8 fishing GVA in mining and quarrying; electricity, gas % on total GVA 27.3 28.3 28.1 ‐0.8 22.9 23.3 23.3 0 and water supply GVA in industry % on total GVA 33.8 37.3 35.7 ‐4.3 30.5 31.3 30.2 ‐3.4 GVA in construction % on total GVA 7.5 8.0 7.6 ‐5.2 7.9 7.5 6.9 ‐7.7 GVA in wholesale and retail trade, ect. % on total GVA 19.5 19.7 18.9 ‐4.0 24.6 24.6 23.3 ‐5.1 GVA in services (excluding extra‐territorial % on total GVA 60.5 61.8 61.6 ‐0.3 67.2 67.7 68.1 0.7 organizations and bodies) GVA in financial intermediation; ect. % on total GVA 17.9 19.4 22.1 13.9 19.4 21.5 24.1 12.1 GVA in public administration and defence, ect. % on total GVA 24.0 21.4 20.6 ‐3.8 22.6 21.1 20.7 ‐1.8 Source: Core team processing of Eurostat data

In terms of GVA the development of the manufacturing sector (NACE D) was also driven mainly by the automobile sector. In 2006, more than a quarter of the gross value added of the manufacturing sector (27 %) was generated in the area of “machinery and equipment” (including automotives). Traditional competences in the field of materials and metals have been exploited here.

Figure 1.3 ‐ GVA, produced by the manufacturing sector in Styria in 2004

30%

25%

20%

15%

10%

5%

0% Manufacture Manufacture Manufacture Paper and Manufacture Manufacture Basic Metals Manufacture Electronics, Automotives Manufacture of food of textiles of wood and printing of chemicals of rubber and and of fabricated Electrical and other of furniture; products and of products of and chemical plastic fabricated metal Engineering Machinery recycling beverages wood and products products Metal products cork(except Products furniture)

Source: Statistik Austria (2004)

14 Work Package 4: “Structural Change and Globalisation”

Conclusion: i.), After decades of industrial monostructure in the coal, iron and steel production sector Styria should move to sectoral diversity in more technology oriented niches. ii.), Future structural change can be only propelled by a continuous renewal of a new innovative firm base in the technology services and by the development of regional field of competence. iii.), In order to address this issue the attraction at new knowledge oriented companies to the area and the promotion of innovative new companies needs to be further fostered

1.3.1.3 Production system

As the conceptional model points out, regional production systems are embedded in the regional firm structure and labour market. The lack of strong local supply‐chain linkages and of intra‐industry collaborative modes between large firms and SMEs may hinder the speed of new technology adoption and the spread of flexible modes of production. The following section shows that Styria is facing challenges of structural change in the domain of regional production systems. As described before, structural change in Styria can be on the one hand well within the existing industry specialisation but meanwhile it would appear as a change of production systems, accompanied by technological upgrading. The sectoral specialisation of the region and the (re)location of production are strong correlated. Styria suffer from weak links between large firms and less innovative SMEs, from the lack of strong local supply‐chain linkages and of intra‐industry collaborative modes between large firms and less innovative SMEs, from obsolete production processes, from obsolete material infrastructure and from inflexible employees. (Innovationsmonitor Steiermark 2004)

15 Case Study – Styria (AT)

Figure 1.4 ‐ Distribution of product and process development by company size in Styria 1998‐2000

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% Small enterprises Medium enterprises Large enterprises total

only productdevelopment product and processdevelopment only processdevelopment innovationactivity is not ended yet do not do innovation

Source: Statistik Austria 2008; CIS 3 Steiermark

The rather scarce affinity of small enterprises to conduct product or process development in Styria can be used as an indicator for discussion problems in the regional production system. Weak collaboration modes between the firms in Styria can be derivated from the different behaviour regarding innovation activities by firm size. According to the results of CIS Styria 2003, illustrated in figure 1.4, up to 60 % of the respondent small companies conduct innovation. Only 15 % of the responded small companies carry out product development, 6 % carry out process development and about 14 % both activities. The size of companies correlates strongly with innovation activities. Up to 60 % of the medium size enterprises conduct any form of product and process development. Only 16 % of the responded large enterprises are not innovation active. To sum up, a weak absorption capacity of companies hinders the speed of collaborative supply chain and the adoption flexible modes of production. Change in production systems (accompanied by technological upgrading) took different forms in Styria. Firstly, a shift from mass production towards flexible specialisation and niche markets was observable in the metal manufacturing sector in Styria (InTeReg (2005), Hartmann et al. (2006), Tödtling et al. (2004). Secondly the reorientation to more collaborative patterns of production and the fostering at stronger supply chain linkages were very advanced challenges in Styria.

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Figure 1.5 – Distribution of companies by NACE sectors (%) in the eligible areas of Styria 2000‐2006

Real estate, renting and business activities Mining and quarrying Manufacturing n.e.c. Steiermark Manufacture of wood and wood products West‐ und Südsteiermark Manufacture of transport equipment Oststeiermark Obersteiermark Manufacture of pulp, paper and paper products; publishing … Liezen Manufacture of other non‐metallic mineral products Manufacture of machinery and equipment n.e.c. Manufacture of electrical and optical equipment Manufacture of chemicals, chemical products and man‐made … Manufacture of basic metals and fabricated metal products Financial intermediation Electricity, gas and water supply Construction Agriculture, hunting, forestry and fishing Real estate, renting and business activities Mining and quarrying Manufacturing n.e.c. Manufacture of wood and wood products Manufacture of transport equipment Manufacture of pulp, paper and paper products; publishing … Manufacture of other non‐metallic mineral products Manufacture of machinery and equipment n.e.c. 2006 1998 Manufacture of electrical and optical equipment Manufacture of chemicals, chemical products and man‐made … Manufacture of basic metals and fabricated metal products Financial intermediation Electricity, gas and water supply Construction Agriculture, hunting, forestry and fishing

0% 2% 4% 6% 8% 10% 12% 14% 16%

Source: Wibis Steiermark 2008, Wirtschaftspolitisches Informations‐ und Berichtssystem Steiemark

In Styria, due to the region’s engineering tradition, scientific fields such as materials technology, mechanical and automotive engineering, and energy research are strong. Based on sectoral competences in the automotive sector proactive policies have proved successful (like cluster policies) and major improvements in the supply chain for the automotive industry have been established. Looking at the sectoral distribution of companies between 1998 and 2000 in Styria, it is obvious, that the number of companies increased in sector ”Manufacture of machinery and equipment n.e.c”. In the late 80s and 90s Styrian industry had a strong focus on capital goods and upstream products, and consumer goods were rather underrepresented. Recently regional renewal took place as a result of companies undertaking extensive investments in new technologies.

17 Case Study – Styria (AT)

Conclusion: Regional production systems in Styria are characterised by significant differences in the firm structure, by a lack of strong local supply‐chain linkages and of intra‐industry collaborative modes. The weak collaboration between large firms and SMEs hinder the speed of new technology adoption and the spread of flexible modes of production.

1.3.1.4 Innovation potential

As the conceptional model specifies, apart from significant differences among Objective 2 regions in terms of institutional thickness, the innovation systems of Objective 2 regions may suffer from missing innovation drivers on the demand side. Barriers to innovation are determined by a lack of absorptive capacity of local firms. The following section will present and specify statistical based arguments for the existence of demand side barriers to innovation in Styria’s Objective 2 region. In 2002, Styria exhibited the highest R&D‐rate in Austria particularly in the higher education sector and large leading companies (e.g. Magna Steyr Fahrzeugtechnik). Expenditure on R&D in the private sector in Styria is much higher than in Austria (BERD: 2002: 2.2 % 2004: 2.1 % and in Austria 2001: 1.4 % 2004: 1.7 %) and even twice that of the EU15. Recent numbers point to an R&D‐rate (GERD/GRP) of 3.3 % for 2002, which is considerably above the R&D‐rate for 1998 of 2.5 %. Both rates are far above the EU‐25 average of 1.9 %. One can say that Styria is well on its way to reaching the Lisbon criteria (3 % R&D investment in the private sector). (See Table1.6)

Table 1.6 ‐ Innovation potential (NUTS2)

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 1995 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 BERD % of GDP n.a 2.2* 2.1** ‐4.5 1.4* 1.7 20.9 1.1 1.3 18.2

GERD % of GDP n.a 3.3* 3.2** ‐3.0 1.9** 2.5 31.6 1.8 2.0 11.1 * Data for 2002, ** Data for 2004 Source: Core team processing of Eurostat data, InTeReg processing of Eurostat data 2009

Notwithstanding these impressive numbers it is worth to lay stress on the fact that R&D‐expenditures are concentrated in a relatively small group of large firms. The most common indicator usually used to describe or analyze innovations‐behaviour of firms is the innovation quote ‐ which describes the portion of enterprises on responded enterprises that precisely stated to launch product or process‐innovation (CIS 2003)5, For the period from 1998 to 2000 83 out of 180 (i.e. 47 %). respondent enterprises were innovating in Styria – the national sample for Austria during the same period contains 557 innovating enterprises by having a sample of 1,304. (i.e. 43 %). The innovation quote strongly correlates with size: between 1998‐2000 about 42 % of small companies, 65.5 % of medium size companies and 84.3% of large companies innovate. (See Figure 1.6)

5 i.e. enterprises that have either introduced new or significantly improved products into the market, introduced new or significantly improved processes in their enterprise, or at least carried out innovation activities aimed at introducing product or process innovations.

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Figure 1.6 ‐ Distribution of the Innovation potential by size of firms between 1998‐2000 (NUTS2 Styria)

90.0% 84.3% 80.0%

70.0% 65.5%

60.0%

50.0% 42.0% 40.0%

30.0%

20.0%

10.0%

0.0% small medium large

Source: Wirtschaftskammer Steiermark 2008; CIS 3

Leaders in innovation in Styria are characterised by: • intensive R&D activity • a high proportion of skilled employees • strong cooperative networks • success on the market, i.e. a large part of their turnover stems from the introduction of new products.

Thus, these regional leaders drive innovation for the whole of Styria. In addition, these companies compete intensely on international markets, promote the regional knowledge base, and also act as the initial starting point in the further extension of innovation (by aiding the formation of networks, supply chains etc.). As a result of ever stricter rules on competition, and increasingly tight controls on Structural Funds arrangements, it is likely that the possibilities for direct provision of financial support and subsidies to companies will in future become more and more limited in scope. But on the other hand these regional leaders cause free rider problem by the national and regional innovation support systems.

Table 1.7 ‐ Innovation potential (NUTS2)

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 1995 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Employment in high‐tech % on total 3.1 4.1 3.5 ‐14.6 4.9 4.1 ‐16.3 4.7 4.6 ‐2.1 sectors on total employment % on total R&D personnel in all sectors n.a 2.2* 2.7 1.8* 2.1 n.a. n.a. ‐ employment * Data for 2002 Source: Core team processing of Eurostat data

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Among the most important aspects of the regional innovation capacities are: the provision of access to a pool of qualified employees. Employment in high tech sectors and the R&D personnel as a second input indicator can provide additional insights in this issue. The employment in high‐tech sectors and the total employment in Styria has a lower density than the national average even than the EU15 level. For 2000 Styria shows, with R&D personnel of 2.2 % of total employment, a higher density than the national level Otherwise looking at the regional disparities of R&D personal it is for sure that the hugest number of R&D personnel is concentrating in the area of Graz. In Styria further challenges are entailed in the gradual extension of the innovation base, i.e. in gaining the attention of companies who have so far not shown any interest in being part of technological innovation processes and in integrating them into respective systematic procedures. In the region there is little tradition of drawing on external services for SME development and innovation support. Thus, any policy measures which help to integrate companies into local or cross‐border R&D and supplier networks will become crucial. The necessary policies might include awareness raising measures, advice centres for specific needs and programs for service provision. Otherwise these programs should be easily accessible financial support programs for those launching innovation activities, and/or measures to integrate SMEs into the knowledge generation processes.

Conclusion: Styrian innovation systems suffered from a lack of absorptive capacity by local SMEs and therefore from missing innovation drivers on the demand side. Innovation activities and R&D expenditures concentrated in a relatively small group of large firms. Future competitiveness and changes can be only driven by creation of a broader sphere of innovative firms.

1.3.2 Understanding the geography of structural change

In Styria, the diversity of the intraregional economy gives some indication of the expected impact of structural changes. On the one hand there is a rural periphery to the South, exhibiting some industrialisation since the 1970s. Besides labour intensive industries such as leather, textiles and clothing (in Oststeiermark employment in agriculture decreased by 11.1 % between 2000‐2006, in West‐Südsteiermark by 11.4 %) there are also modern sectors such as electrical products, electronics and machinery as well. In 2000 about 40 % of the regional GVA have been produced by the industry sectors in Süd‐, Ost‐ and Weststeiermark, whereas industry declined by 9.9 % between 2000 and 2006. The service sector has become more important, with up to 60 % of the provincial GVA originating in this region. As a small economy, Austria has a limited domestic market. However, the South of Styria borders on the more dynamic regions of Eastern Europe. With the help of strategic initiatives the Süd‐, Ost‐ and Weststeiermark could be able to overcome their initial disadvantage and take advantage of the close ties to the new EU member states. On the other hand, Obersteiermark has traditionally had a heavy focus on the manufacturing of iron ore and coal, leading to the development of inflexible economic structures and the inability to adjust to changing economic conditions. The Eastern part of Obersteiermark is heavily dominated by industry. In 2006, 50 % of the provincial GVA was produced by the industry sector even though the rate of industrial production stagnated between 2000 and 2006. In the western part of Obersteiermark industrial production declined between 2000 and 2006 by 10.8 % and was much lower than in the East (44.8 % in 2000, 20 % in 2006). In Eastern Obersteiermark GVA in the service sector was only 47.1 %, in the West of Obersteiermark, about

20 Work Package 4: “Structural Change and Globalisation”

55 %. As a consequence, low growth rates of industrial production and high unemployment and migration rates which are jeopardising the economic competitiveness of the whole region. (see Table 1.5)

Table 1.8 ‐ Geography of structural change (NUTS3)

∆ (%) Region Unit 1995 2000 2006 00/06 At221 Graz Euro PPP 28,000 31,400 36,800 17.2

At222 Liezen Euro PPP 18,100 20,000 24,900 24.5

At223 Eastern Obersteiermark Euro PPP 16,900 19,100 26,900 40.8

At224 Oststeiermark Euro PPP 14,300 16,900 19,900 17.8

At225 West‐ und Südsteiermark Euro PPP 14,000 16,200 20,400 25.9

At226 Western Obersteiermark Euro PPP 16,800 18,900 22,300 18.0 Source: Core team processing of Eurostat data

A particular aspect of the geography of structural change in Styria are clusters that are settling and developing in the region. Geographical distribution of the clusters in Styria is strongly related to the specialisations of the region. The main driving force behind the establishment of cluster policy was the need to cope with regional structural and economic change. Deciding, which technologies should form the thematic centre of a cluster is in most cases based on scientific research and on an analysis of the strengths of the regional economy leaded by SFG in cooperation with RTOs. Three clusters appear particularly relevant: automotives, materials and wood. Styria was one of the Austrian regions that were particularly hard hit by structural change and the decline of the state‐owned metal industry. On the other hand, Styria enjoyed a high level of expertise in the automotive sector. With the presence of renowned firms like Steyr‐Daimler‐Puch (currently Magna Steyr) the decline was slowly reversed in the 1990s. The automotive industry led this recovery. The ACStyria Automobile Cluster was established in 1995 to help boosting the region’s economy in Graz and its surroundings. This was the first created cluster in Austria and has since served as a model of “cluster creation” internationally. The region now enjoys a globally successful car and engine manufacturing position. In addition to this cluster, the region is now developing other major initiatives such as the Wood Cluster Styria in Süd‐West Steiermark, Human Technology Styria and Materials Cluster Styria in Obersteiermark. The Materials cluster is the oldest and largest cluster. It consists of 155 firms, provides 23,300 jobs and contributes to about one third of Styrian industry sales. The production of iron and steel still dominates. After a severe crisis in the 70s, due to massive surplus capacity, the sector has been restructured by splitting up the large state‐owned conglomerates and privatizing them. Some of these (now) independent firms regained their competitiveness in the nineties through greater concentration on core businesses and through improved innovation. Wood/paper is a traditional, resource based cluster in Styria, mainly located in eastern Obersteiermark and in West und Südsteiermark, covering a wide (vertical and horizontal) range of products. It comprises timber processing, paper (and related products), furniture, related machinery, etc. There are 70 firms in this cluster employing 11,000 persons. The cluster is growing and shows a good export performance. Nevertheless, it faces intense competition and many companies have been forced to move into higher value added‐segments of the value chain.

21 Case Study – Styria (AT)

Table 1.9 ‐ Overview on Clusters within Styria

Total com‐ Title Goal: Focus panies Grouping all in the automotive value chain Grouping all in the automotive value chain Automobile available forces of the region, thereby increasing available forces of the region, thereby increasing ~186 Cluster Styria the innovation strength and international the innovation strength and international competitiveness competitiveness. Wood Cluster Harnessing and working timber and wood, the ~70 Innovative wood construction Styria raw material, in innovative applications. Acts as platform and innovation mainspring for Metals, synthetics, ceramics, oxidic materials, Material Cluster partners in the field of materials whereby all compounds sections/industries in Styria are represented Project development company for the setting up of a cluster in the field of medicine , bio‐ and Human pharmaceutical technologies for the cross‐ Metals synthetics, ceramics, oxide, materials, technologies ~200 linking of research and economics as well as for compounds Styria the strong positioning of Styrian competences on international level. Research and development of alternative energy Strengthening the fields within the range of Eco & Co ~600 and merging of companies in ecological renewable energies, effective constructing and engineering to form a cluster refloating, environmental technologies etc. Strengthening the fields food and food TechforTaste ~10 technology in Styria, particular the R&D in the Food technology field of food technology. Source: http://old.sfg.at/?lang=english , Report on clusters in Styria

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2. Regional policy 2000­2006: strategy and objectives

2.1 Regional policy mix for structural change and globalisation

Styria elaborates its own regional development strategies within the frameworks of the operational programme and the pre‐existing regional development plans. This approach has two major advantages: first, it contributes to a greater coherence between all the different plans. Secondly, it strengthens the credibility next to the involved actors and enhances its impact, far more than an isolated strategy would have. The following section presents the background and main features of these documents. Styria was an “early mover” respectively the regional development strategies in Europe. The actions undertaken by the regional government during the period 1995‐2006 focused strongly on economic restructuring and promotion of the region. Adjusted for local conditions, these policies are applied widely across various sectors of the region. During the period 1995 ‐2006, and therefore during the ERDF supporting period the main documents for regional development policy in Styria were: a) the Technologiepolitisches Konzept Steiermark 1996 (Technology Policy Concept); b) the Wirtschaftsstrategie Steiermark 1995 (Economic Strategy of the Federal State of Styria); c) the Forschungsstrategie 2005 plus (Research Strategy 2005 plus) and d) Einheitliche Programmplanungsdocument (EDDP) 200‐2006 (Single Programming Document 2000‐2006). The Economic Strategy of Federal State of Styria (Land Steiermark, 1995a) and the Technology Policy Concept (Land Steiermark, 1995b) form the basis for programme funding by the European Regional Development Fund for the period 2000‐2006. The fundamental principles on which they are based are strongly reflected in the operational programme for Styria and the ERDF Measures. The explicit objective of these concepts is to strengthen competitiveness and thereby safeguard long‐term growth and employment while taking into account of the principles of sustainable development (Land Steiermark, 1995: 34). The main elements of the policy development document in Styria covered: • Building upon regional strengths and developing proactive cluster policy • Extension and further development of leaders in innovation • Internationalization and inter‐regionalization • Promoting new company formation which is technology oriented and knowledge based. • Job qualifications and further training • Strengthening the regional knowledge infrastructure • Policy design and implementation.

For the region of Styria, the structural problems addressed in the report on Technology Policy Concept 1995 (below average R&D and innovation, low rates of new firm formation, low growth) have been dealt with successfully and this initial phase of structural change has meant that all the principle policy objectives have been achieved. Concerning the initiatives to foster internationalisation, the RIST (Regional Internationalisation Styria)6 was the first initiative at regional level to aim at interregional adjustment of regional economic policies. Through

6 The aim of the RIST‐program is that Styria performs the often quoted turntable function in a partnership understanding. The development of long term cooperations between the Styrian region and the south‐eastern European regions is to be promoted also.

23 Case Study – Styria (AT)

bilateral co‐operation agreements between Styria and partner regions, economic development strategies are coordinated and mutually adjusted, leading to jointly targeted pilot projects. The management and implementation structures for the Austrian Objective 2 are fundamentally the same, although a degree of regional difference inevitably exists in the actual practice. At the national level the coordinating Ministry for Structural Funds is the Federal Chancellery. In addition to the Federal Chancellery, ÖROK (Austrian Spatial Planning Conference), the coordinating body for regional development issues within Austria, also carries responsibilities for over‐arching inner‐Austrian coordination. Financial coordination for each fund is carried out by so‐called ‘Fund‐corresponding Ministries’ (fond‐korrespondierende Ministerien). Regional policy is viewed more as the spatial dimension of a range of sectoral policies. What could be classed as the more specific regional policy component is oriented towards dynamic structural change through the stimulation of endogenous regional potential. At the regional level local governments are responsible for the management of the Structural Funds programme. In the case of Styria, the economic development department within each government has taken on this role in the current programming period. Most of the ERDF programme has been financed and managed by the Styrian Industrial Promotion Agency, the SFG7 (Steirische Wirtschaftsförderungs‐ gesmabH). So, the regional development programme are mainly offered by SFG and are customised business support and finance packages for Styrian enterprises. In accordance with the four pillars (skills development, regional and interregional networking, technology, innovation and research and development, entrepreneurial spirit) of the work of SFG, these programme are designed to accelerate the growth and development of Styrian enterprises. The focus is mainly on supporting SME’s R&D activities, innovative start‐ups, spin‐offs, technology transfer. Between 2000 and 2006 In Styria there were numerous innovative projects in the Objective 2 areas, which are (or have to be) only supported by national funds (such as RIST project, cluster initiatives). Some national support schemes have not been integrated in the program (mainly due to technical difficulties) and/or Structural Fund support has not been taken into consideration by the federal side in the configuration of the support actions. This especially concerns innovative measures which are co‐financed by national and regional authorities.

Targeted activities within the RISt initiatives were: Lasting co‐operations within the region; a joint establishment of Central‐European networks; a long term positioning of Styrian economy in economically important regions; a positioning of the cooperating regions within the entire international environment; establishing products and enterprises – an active regional marketing; establishing and maintaining economically long term contacts (network of relations); coordinated and joint support of export and internationalisation efforts; nNetworking activities of institutions which are endeavouring export and internationalisation 7 The Styrian Industrial Promotion Agency (SFG) was founded in 1991. It acts as an independent, semi‐public regional development agency, owned, controlled and financed by the provincial government. It has the goal to improve the conditions of economic development in Styria and to support disadvantaged areas. In line with Styrian economic policy SFG develops objectives for increasing the appeal of the Styrian economic area

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2.2 Overall strategy of the 2000­2006 Objective 2 Programme

During the 2000‐2006 period, Austria received over € 2.07 billion in aid from European funds. Styria received the largest amount of funds (both public and EU) due to its larger size. Styria received around € 215.5 Mill from the EU Structural Funds via the Objective 2 Programme. The programme amounts to € 1.139 million

In Styria money received from ERDF has a dual function: first, the projects financed by the ERDF rise in the population the awareness of the importance of the EU support. At the same time, there is “force” a coherence between the national, regional and European priorities creating therefore a suitable background for any administrative or political changes that need to be made. Promotion of dialogue and partnerships among the regional and national actors occurs in parallel, since this is a major pre‐requisite for all EU subsidized projects and guarantees greater public participation. Between 2000‐2006 Styria was affected by objective 2 in different stages (partly, phasing‐out or fully). The mix of areas receiving full or partial funding from a variety of funds was responsible for great confusion. It was hard, in fact, to define whether the Structural Funds money was used in these areas in combination with the regional and the national funds or whether only national resources were used, under the same programme.

The Objective 2 Programme aims at achieving sustainable development in core economic sectors and related areas of strengths in the regional economy, improving international competitiveness and hence creating permanent jobs and improved living conditions in the region. Through the single programming document, the region of Styria find itself in a position to offer the best conditions for the implementation of the Objective 2 funding. In addition to a detailed list of measures, the document also covers overall objective definitions and development strategies providing the basis for the funding policy of the region. These conform to federal and regional objectives. The programme for the period 2000‐2006 evolved along 5 priority areas: • Priority 1: The manufacturing and the service sectors • With the overall aim of strengthening the economic base of the regions, the focus here lies on encouraging innovative business start‐ups and attracting new companies to the area. Other measures also include schemes for modernizing existing companies and improving the structure of the small business sector. • Priority 2: The information society • Preparing the region’s businesses for the information society requires, according to this priority’s measures, promoting cooperation between companies in the fields of R&D and innovation while encouraging the consultation and transfer of know‐how. To facilitate this process, innovative business parks (“Impulszentren”) were set‐up or reinforced. • Priority 3: Integrated regional development, tourism and culture Measures essentially promote infrastructure creation and other commercial investments in related fields. • Priority 4: Technical assistance • Priority 5: Employment and human resources

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Table 2.1 ‐ Synoptic view of the Objective 2 Programme

Budget (euro, and % Brief description and objective of total budget) SPD31.08.2006 The Objective 2 Programme is intended to contribute to achieving the sustained development of the core economic sectors and the areas of strength Overall programme in the regional economy enhancing international competitiveness and hence 1,650,159,936 / 100 % creating long term employment and improved living conditions in the region. This priority brings together all the strategies and measures that relate both to Axis 1 the support of industrial and commercial enterprises and to business‐related 1,193,462,605.96 € / Promoting the manufacturing and services. Support is granted to the foundation of enterprises, the relocation of 72.3 % service sectors companies, the growth and modernisation of businesses and the improvement of the environment situation in companies This priority concerns strategies and measures in the field of ʺresearch and development, technology and innovationʺ and ʺtelecommunications and the Axis 2 information societyʺ. Such strategies cover the promotion of business Promoting competitive locations investments, infrastructure and ʺsoftʺ measures. Including upgrading, 358,295,077.69 € / and preparing for the information networking and the closing of gaps in the infrastructure, an increase of R&D 22 % society intensity, the improvement of adaptability and technology diffusion, the development of clusters, networks and business co‐operations as well as consulting and knowledge transfer. This priority brings together all the measures in the field of tourism, culture Axis 3 and the integrated development of regions. These comprise the support of Promoting the development 95,350,792,.9 5 € / productivity‐increasing and quality‐increasing investments and of marketing potentials of integrated regional 5.7% measures, the development of new innovatory tourism programmes and development, tourism and culture assistance to cultural projects and initiatives. All the strategy elements of the ʺlabour market and human resourcesʺ sector that are not implemented within the framework of Objective 3 or the National Axis 4 Action Plan for Employment are brought together here and are financed from Promoting employment and human the European Social Fund (ESF).The strategies in this priority include the resources reduction of unemployment, the promotion of flexibility on the labour market and the promotion of women at the place of work. This involves the securing of efficient and effective implementation, the Technical assistance monitoring and assessment of the Objective 2 programme. Responsibility for 3.051.459,45 € / 0,2 % Objective 2 implementation monitoring lies with the Office for Economic Policy at the Office of the Styrian Provincial Government Source: Objective 2 Region Styria SPD 2000‐2006

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2.3 Selected fields of intervention and measures

The analysis of the regional structural change in section 1 has highlighted how regional specialisation, innovation potential and production processes in Styria seem to be the key dimensions in order to illustrate the most important factors explaining ongoing structural change and adaptation to globalisation in Styria. In the following section we would like to emphasis the three working hypotheses and the measures co financed by ERDF especial by addressing the working hypotheses. The most advanced future challenges of the structural change in Styria have been described by these hypotheses.

The assessment of the effects of the selected measures on the process of structural change and adaptation to globalisation will, therefore, contribute to the testing of the corresponding working hypotheses 2, 3 and 4 elaborated in the conceptual model:

The structural changes in Styria in the light of the hypotheses taken into consideration by the present ex‐post evaluation leads us to stress the following significant elements: • concerning regional specialisation: a certain degree of specialisation and distinctive core‐competences linked to the regional innovation system and to promising markets could be a competitive advantage for a region. Some Objective 2 areas, however, specialise in industries that suffer from severe external competition. The spatial concentration of economic activities and possible externalities of agglomeration have to be taken into account in this regard. Problems of structural change and vulnerability to globalisation is frequently a consequence of lock‐in effects and negative selection mechanisms that slow down the necessary change and restructuring. • with reference to regional production processes Styria is characterised by significantly differences in firm structure, by lack of strong local supply‐chain linkages and by intra‐industry collaboration. The weak collaboration between large firms and SMEs hinders the speed of new technology adoption and the spread of flexible modes of production. • as regards innovative potential, Styrian innovation systems suffered from a lack of absorptive capacity by local SMEs and therefore from missing innovation drivers on the demand side. Innovation activities and R&D expenditures are concentrated in a relatively small group of large firms. Future competitiveness and changes can be only driven by the creation of a broader sphere of innovative firms.

Because of the strong logical link established between the challenges of regional specialisation, the level of innovation potential and the types of production process in Styria, it seems to be quite problematic to assign the selected measure to one single hypothesis. In order to keep the analysis manageable, this section focuses on a selection of measures identified as having a potential effect with respect to structural change and globalisation. To analyse the relevant hypotheses the following four measures were selected:

Within Priority Axis 1 (Promoting the manufacturing and service sectors): • M 1.1 Attracting new companies to the area • M 1.3 Modernisation of enterprises.

Within Priority Axis 2 (Promoting competitive locations and preparing for the information society):

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• M 2.1 Setting up/expanding innovative new business parks (ʺImpulszentrenʺ) • M 2.2 Inter‐company research and innovation mobilizing companies for employment (28.55% of the programme).

After considering the available evidence on the implementation of these measures, fieldwork evidence will be used to describe their impact. During the analysis we will like to investigate the impacts produced: • by actions aiming to support regional specialisation, which is one of the main approach (pursued by Styria. The selected action concentrates on two key issues. First, on broadening the industrial base of Styria by attracting new highly innovative firms in the region (Measure 1.1), in order to make the region economy less vulnerable and build new regional sectoral strengths. Second, the selected measure indicates the strengthening of competences of existing and new set‐up SMEs by infrastructure investment (particularly for small companies able to close the gap in the value chains of the regional economies in Measure 1.3). • by type of intervention aiming directly at the improvement of the production system. The selected measure (Measure 2.1) promoted networking, built up framework condition for business partnerships: and for collaborative production processes. • by type of intervention aiming to increase the innovation potential. Furthermore, as the regional weakness in the field of innovation and R&D was one of the criticalities that slowed down the co‐ operation activities and Styrian integration into international markets. It was felt that the evaluation of the measure achieved in this area would play a crucial role in determining the intensity of the contribution from the SPD to solve that problem. Out of all the measures that were implemented to achieve this goal, those that represented the core of the innovative process were selected. The emphasis was on support for technology transfer and diffusion of scientific, technological and industrial knowledge and/or the commercialisation of regional research activities (across a range of fields like nanotechnology sciences, biotechnology, new materials, electronic, etc.) and on the support activities such as the development of new scientific centres (Measure 2.2).

As mentioned previously, the programme of ERDF was completely in line with the regional development strategies so that several measures directly targeted the issues of structural change and globalisation. Up to 31. 12. 2006 in Priority Axis 1 a considerable proportion (100.75 %) of co‐financed project costs, according to program planning had been committed. Co‐financed private disbursements exceeded planned values up to 2006. In the whole priority Axis 1, 923 investment projects had been supported with € 131.9 million by public funds and a total investment volume of € 800.6 million EU‐Funds thus made an important contribution in the implementation of structural policy in Styria. In Priority Axis 1 the enterprises supported plan to create a total of 4,143 new jobs with these funds. Priority Axis 2 is somewhat smaller. Here, 1,738 projects were supported (excluding 5,595 in the Measure 2.6 Consulting services for SMEs) with a total investment volume of € 275.3 million EU‐Funds, and € 53.2 Mill public funds. Priority Axis 2 accounted for 87 % of co‐financed project costs. In total 171.42 R&D Jobs and 121 new innovative products were created.

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According to the programming complement8 the budget allocated to the measures considered as most relevant for the issues of structural change and globalisation (three and two stars measures presented in the table 2.2 below) amounted to a total of 53 % (€ 612 million) of the total programme. The ERDF contribution to these measures was € 82 Mill (42 % of total ERDF funds). The national contribution to these measures was € 89 million (42 %of the national contribution) and the private contribution was € 436 million The leverage effect of ERDF Funds on private investment was very high. Despite the fact that the whole Priority Axis 1 and 2 can be considered as pertinent with the scope of the study, nonetheless, a detailed screening of the ERDF programming document was carried out in order to identify and select only those measures which were likely to have the greatest impact in addressing the issues raised by structural change and globalisation. The measures, ranked in order to their importance, are listed in Table 2.2.

8 Programming complement 14th August 2008

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Table 2.2 ‐ Measures relevant to structural change and globalisation: main features

Relevance to Financial weight N° of projects Type of Structural change structural change Measures Brief description (including date of implementation) % tot. % / beneficiaries intervention dimension and globalisation budget expenditure * This measure concentrates on the location of innovatory, business‐ Attracting of related services, enterprises in the industry and trade sector, in Internationalisation M 1.1 Attracting new Foreign direct particular in the trade sectors of motor vehicle engines and suppliers, 5.12 158.92 16 and Relocation *** companies to the area9 investment/ materials and metals, wood, electronics and medical technology. The Innovation potential business Support policies are intended to close gaps in the existing value added chains. The support of initial investments in stimulation new enterprises. M 1.2 Setting up Strengthening entrepreneurial potential and broadening trade sector Regional innovative new 0.54 74.57 85 Business Support ** variety should increase innovative capacity within the region and specialisation companies reduce susceptibility in crisis situations. Financial support is granted to industrial and trade projects ‐ M 1.3 Modernisation of independent of the business size. The intention is to aid Infrastructure Production system 49.65 166.75 1897 *** enterprises implementation of new technologies and new production lines and to Investment Innovation potential help modernise production processes and business organisation. M 1.4 Improvement of the To promote priority investments that encourage the dynamism of Production system structure of the small‐ existing, newly founded or acquired small and medium sized 5.55 143.62 326 Business Support Regional * business sector enterprises. specialisation Financial support is available for the adaptation of businesses to environmentally compatible production processes (”cleaner Business support Socio‐economic M 1.5 Environmental production“) aimed at an economical use of raw materials and energy, 11.46 104.85 298 for reducing change and human * promotion the avoidance or reduction of pollution to water and air, and more pollution capital environmentally compatible waste disposal. M 2.1 Setting The aim is to develop and modernise the business‐proximate and up/expanding innovative technological infrastructures of a region by means of constructing 3.87 156.98 45 Business Support Innovation potential *** new business parks business parks (research and start‐up centres, technology parks) and (ʺImpulszentrenʺ10) the expansion and profiling of existing facilities.

9 In the case of Measure 1.1;. 1.2; 1.3 the financial supports co‐financed by the ERDF can be granted to: •Substantive investments in buildings, machinery and equipment •Intangible costs directly related to the project •Gross wage costs and social contributions according to competition rules in connection with the investment‐related place‐of‐work bonus •The contribution from the Structural Fund shall not exceed 15 % of the total costs. 10 In the Measure 2.1 Costs capable of promotion are: •Feasibility investigations •Planning and projecting costs

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The support concerns, on the one hand, non‐university research Innovation and centres (R&D infrastructure) such as regional research institutes or M 2.2 Inter‐company technology/ facilities whose function is the transfer of research results, and on the 1.67 106.19 115 Innovation potential *** research and innovation11 Infrastructure other hand, supra‐business research projects of a pilot and Investment demonstration character. Financial support is granted to industrial research and pre‐ competition development projects. These should create information M 2.3 R&D and Innovation and that can be used for the development of new products, processes and 13.84 130.66 308 Innovation potential ** innovation in firms technology services and to implement substantial improvements in existing products, processes and services. This concerns the creation of a climate of co‐operation and the overcoming of mental barriers in supra‐business collaboration. The assistance to business networks should achieve synergy effects M 2.4 Networking, (knowledge transfer) and promote the formation of cluster and consultation and 0.89 111.82 330 Business Support Innovation potential ** network projects, the main focus being inter alia the promotion of knowledge transfer external consulting (including report writing and costing), the identification of products and intangible investments (e.g. industrial design, marketing, innovation). To introduce new information and avenues of communication in the economic and educational sector and to support their use over the Production system M 2.5 Preparation for the Infrastructure long‐term, primarily by means of a broad‐scale diffusion aimed at 0.89 128.86 196 Internationalisation * information society Investment small and medium sized enterprises and the development of a field of and relocation strength within the field of e‐business for the regional economy. Source: Objective 2 Region Styria SPD 2000‐2006 ; * Legend: ∗ marginally relevant, ∗∗ relevant, ∗∗∗ extremely relevance

•Building costs for the construction and expansion or networking of business centres “Holistic marketing“ involving enterprises (company acquisition, events, trade fairs, public relations work, etc.) •Common facilities (e.g. conference infrastructure) •Implementation of necessary telecommunications and network structures •Measures in networking and streamlining infrastructural facilities 11 In the Measure 2.2Costs capable of promotion are: R&D infrastructure Apparatus costs including necessary constructional components and personnel costs. Feasibility studies and planning costs in connection with the R&D infrastructure Supra‐business R&D projects Personnel and material costs in connection with the projects Acquisition of equipment, pro rata Preparatory feasibility studies or the like

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3. Effects of the selected ERDF measures on the process of structural change and adaptation to globalisation

This section offers an assessment of the contribution of the measures selected in Section 2.3 in promoting structural change and enabling adaptation to globalisation (Section 3.1). It also explores the qualitative effects achieved by the programme (Section 3.2).

3.1 Assessment of the structural and socio­economic effects

3.1.1 Performance of selected measures

Measure 1.1 ­Attracting new companies to the area

Measure 1.1 Attracting new companies to the area “This measure concentrates on the location of innovatory, business‐related services, enterprises in the industry and trade sector, in particular in the trade sectors of motor vehicle engines and suppliers, materials and metals, wood, electronics and medical technology. Above all they are intended to close gaps in the existing value added chains, fields of competence, and, by means of high quality projects, to act not simply as ”extended workbenches“ but also as means of attracting research and development, distribution or marketing to the region. Another main objective is the support of innovatory service businesses in the information and communication sector”(Land Steiermakr, 2006)

Concerning the realised co‐financed project costs, Measure 1.1 was one of the most successful program in period 2000‐2006. For the period 2000‐2006, 157 % (€ 83.7 million) of the planned intervention sum for Measure 1.1 was completed. As of 31.12.2006, Measure 1.1 had already exceeded the target foreseen (although at this time there was still more than a year to complete the operations). With an ERDF funding of € 7.5 million, total public investment of 16.4 million EUR and private investments of € 67.3 million, the stimulus induced in the programming period was substantial. One can see that in the case of Measure 1.1 the revised initial target values for public funding were successfully reached, and the induced private investment at about 160 % of the planned volume ‐ far exceeded expectations. Thus, ERDF money had a leverage ratio on total investment of 9 %, while the respective value for private investments was 80 %. The high leverage on private investment can be explained by the nature of the measure. Since direct beneficiaries are international, innovation‐focused, service companies, capable of establishing a new subsidiary in the eligible area of Styria, the potential for strong private sector investment effects has been relatively minor.

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Table 3.1 ‐ Measure 1.1 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2005)

Indicator Planned (2006) Realised (2000‐2006) Ratio realised/planned

Total project costs (m €) 53,165,420 84,491,483.05 158.92 Input public funding (m €) 5,316,542 8,833,662.15 166.15 Input ERDF funding (m €) 6,328,281 7,535,257.16 119.07 Private investments induced (m €) 39,874,065 68,122,564 170.84 Number of Projects 10 16 160.00 Source: Objective 2 Styria, Status of Implementation, cumulative values since 1.1. 2000., Land Steiermark, Abteilung 14, June 2009

The indicators in Table 3.1 allow us a closer examination of the promoted actions, in order to differentiate between the size and type of supported organisation. During the programming period in Measure 1.1 6 large companies and 7 SMEs participated. Measure 1.1 proved very effective in promoting start‐ups and relocations. In total six large, and five small and medium size innovative and future‐oriented enterprises were attracted. Furthermore, two large, and two newly set‐up SMEs were co‐financed. These indicators imply, that Measure 1.1 has been validated at the micro level and that the sub program “settling down new companies in the Objective 2 region of Styria” has been dominant. As described in more detail in section 3.2, Measure 1.1 has proved important in attracting FDI to the region. The geographical allocation of the supported projects was concentrated in the rural area of the Objective 2 region of Styria. Up to 93 % of the promoted project was located there Measure 1.1 was also quite effective in terms of attaining socioeconomic objectives with respect to the labour market: due to the ERDF measure, 290 new jobs were created. (Such a number of new jobs should not be considered representative for the growth of the Styrian labour force between 2000‐2006.) The fact, that both the planned number of projects as well as the realised number of jobs exceeded expectations, Measure 1.1 has clearly had a highly positive impact on the Styrian economy.

Table 3.2 ‐ Measure 1.1 ‐ Comparison of selected planned and realised material and socioeconomic indicators (initial planning until 2005)

Measure 1.1: Attracting new companies to the area Large Enterprises SMEs Indicators physical Investment physical Investment Project executing organisation=medium enterprises ‐ 3 Project executing organisation=small enterprises ‐ 4 Project executing organisation= individual enterprise 0 0 Project executing organisation=limited partnership 3 1 Project executing organisation=corporation 6 6 Project executing organisation=regional authority 0 0 Company start up 2 2 Company acquisition 0 0 Settlement of companies 6 5 Plant extension (increasing capacity) 0 0 Modernising/ realignment of companies 0 1 New/settled companies (existing after 2 years) 9 6

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Measure 1.1: Attracting new companies to the area Large Enterprises SMEs Indicators physical Investment physical Investment New/settled companies (do not existing after 2 years) 0 0 Project location‐ urban area 1 0 Project location‐ rural area 8 7 Project location‐ geography. not determinable 0 0 Number of Projects 9 7 Planned number of newly created jobs 0 0 Realised number of newly created jobs 188 102 Source: Monitoring Data, OP‐ERDF Styria 2000‐2006, provided by Land Steiermark, Abteilung 14, June 2009

Measure 1.3 "Modernisation of enterprises"

Measure 1.3 Modernisation of enterprises Financial support is granted to industrial and trade projects ‐ independent of the business size ‐ which are purposed to introduce new technologies and to develop new production lines and to modernise production processes and business organisation. This also includes the development and innovatory application of the new technologies in the so‐called TIME sector (telecommunications, information, media, electronics) and investment for conversion to products, services and processes that are economical with raw materials.(Land Steiermark, 2006)

In general, up to 2006 the implementation of the ERDF program was based mainly on Measure 1.3. This received 49 % of total co‐financed project cost and 26 % of all committed ERDF‐funds. The implementation is characterised by a high commitment rate under Measure 1.3 of about 166.8 %. Within Measure 1.3, in total, 189 projects with an overall volume of € 794.3 million were funded in the period from 2000 to 2006. The high commitment rate here was based on the high value of both public and private investment. The ERDF Funds allocated were more or less identical with the planned value. The induced private investments under this measure are ‐ about 180 % of the planned volume – far exceeded expectations. ERDF funding had a leverage ratio on total investment of 6%, while the respective value for private investments was for 82%.

Table 3.3 ‐ Measure 1.3 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2006)

Indicator Planned (2006) Realised (2000‐2006) Ratio realised/planned

Total project costs (m €) 491,377,060 819,371,181.75 166.75% Input public funding (m €) 65,821,431 86,116,452.94 130.83% Input ERDF funding (m €) 52,747,552 53,235,402.70 100.92% Private investments induced (m €) 372,808,077 680,019,326 182.40% Number of Projects 160 189 118.13% Source: Objective 2 Styria, Status of Implementation, cumulative values since 1.1. 2000., Land Steiermark, Abteilung 14, Juni 2009

Looking at the co‐financed projects in respect of company size, we can say that the promoted actions are 50 % related to large companies and 50 % to SMEs. In these case of large companies, 33 company were enlarged, and 66 were modernised. As regards SMEs, support actions concentrated on modernisation (in 64

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cases). Furthermore, 23 enlargements and 2 start‐ups were co‐financed. The co‐financed projects in Measure 1.3 concentrated on the rural area of the Objective 2 region of Styria. Measure 1.3 had an important, but measured socioeconomic impact on the Objective 2 region of Styria. In the case of the 100 large companies supported, employment increased from 14,224 to 18,142, implying 25 % net labour growth. (3,696 more new jobs, than at the beginning of the supporting period). In the case of the 89 SMEs supported, net employment increased by 29 % (from 3,570 jobs to 4,616).

Table 3.4 ‐ Measure 1.3 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2006)

Measure 1.3: Modernisation of enterprises Large Enterprises SMEs Indicators physical Investment physical Investment Project executing organisation=medium enterprises 41 Project executing organisation=small enterprises 48 Settlement of companies 1 0 Plant extension (rising capacities) 3 3 Modernising/ realignment of companies 6 4 New/settled companies (existing after 2 years) 1 3 New/settled companies (do not existing after 2 years) 0 0 Project location‐ urban area 8 13 Project location‐ rural area 92 75 Project location‐ geography. not determinable 0 2 Number of Projects 100 100 Number of jobs after project end 14446 3570.7 Number of jobs before project start 18142.41 4616.7 Source: Monitoring Data, OP‐ERDF Styria 2000‐2006, provided by Land Steiermark, Abteilung 14, Juni 2009

Measure 2.1 Setting up/expanding innovative new business parks ("Impulszentren")

Measure 2.1 Setting up/expanding innovative new business parks The aim is to develop and modernise the business‐proximate and technological infrastructures of a region by means of constructing business parks (research and start‐up centres, technology parks) and the expansion and profiling of existing facilities. The support of such projects provides a direct boost for the foundation or location of new enterprises, at the same time assisting the creation of new qualified jobs. (Land Steiermark, 2006)

In the programming period 2000 to 2006 in Measure 2.1, 48 projects with total costs of € 63.1 Million were funded. 155.9 % of planned intervention for Measure 2.1 was completed. As regards costs, Measure 2.1 was the most successful program in the priority Axis 2. Under Measure 2.1, ERDF funds of € 15.1 million, and public funds of € 18.2 million resulted in private investments with a total amount of € 30 million The total investments of € 63.2 million thus provided a leverage ratio of 47.2 % for private investments.

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Table 3.5 ‐ Measure 2.1 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2005)

Indicator Planned (2006) Realised (2000‐2005) Ratio realised/planned Total project costs (m €) 40,653,604 63,818,027.94 156.98% Input public funding (m €) 11,778,678 18,259,840.07 155.02% Input ERDF funding (m €) 15,001,455.77 15,102,643.48 100.67% Private investments induced (m €) 13,873,470.23 30,455,544 219.52% Number of Projects 10 14 140.00% Source: Objective 2 Styria, Status of Implementation, cumulative values since 1.1. 2000., Land Steiermark, Abteilung 14, Juni 2009

Regarding table 3.1, distribution of funded projects according to project content is as follows: 14 projects focussed on soft measures, i.e. drawing up strategic plans for impulse centres (3), writing regional development plans (3) and building up business co‐operations. (7) During the supporting period 34 funded projects focused on building up research centres and technology parks. Among these centres, 22 impulse centres with a technological focus were established. These covered several technology fields (wood, materials, anti‐pollution technology, food‐technology, human technology), but not IT technology.

The favourable boundary conditions induced, reduced the risks inherent to entrepreneurial activity, and provided a perfect breeding ground for start‐ups, co‐operation and technology transfer as well as innovation and new product developments. As proof of the economic efficiency of the centres, one can see that instead of the planned 67 companies, 131 companies established a long term location in the centres. Cooperation among enterprises in the impulse centres, as well as with regional companies and educational institutions helps stimulate the development of new products, services and procedures, and thus create new jobs.

Table 3.6 ‐ Measure 2.1 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2005)

Measure 2.1: Errichtung/Erweiterung von Impulszentren 1641 SMEs – common services for 1642 KMU ‐ common services business, physical Investment incl. for business ‐ Soft measures corresponding analyses Development concepts, u. reg. (research and Development studies, Activation start‐up centres, technology parks, of Comp‐Potentials, Comp‐ exhibition centres) cooperations and networks, Project executing organisation= individual enterprise 0 9 Project executing organisation=limited partnership 0 1 Project executing organisation=corporation 1 4 Project executing organisation=regional authority 0 0 Project concerns IT sector 0 0 Project does not concern IT sector 34 14 Set up/expand./ modern networks 1 0 Set up/expand. business parks/industrial parks 4 0 Set up/expand. Business incubators(innovation centres 17 3 Set up/expand. exhibition hall 0 0 Project location‐ urban area 2 3 Project location‐ rural area 32 5

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Measure 2.1: Errichtung/Erweiterung von Impulszentren 1641 SMEs – common services for 1642 KMU ‐ common services business, physical Investment incl. for business ‐ Soft measures corresponding analyses Project location‐ geography. not determinable 0 6 Number of Projects 34 14 Infrastructure realised new/improved area 251324 0 Infrastructure planned new/improved area 526678.74 0 Regulation development concepts, regulation studies 0 3 Business cooperation, Networks 0 4 Planned number of partners involved in the 0 67 network/cooperation Planned number of partners involved in the 0 131 network/cooperation Source: Monitoring Data, OP‐ERDF Styria 2000‐2006, provided by Land Steiermark, Abteilung 14, Juni 2009

Measure 2.2 Inter­company research and innovation

Measure 2.2 Inter‐company research and innovation The support concerns, on the one hand non‐university research centres (R&D infrastructure) such as regional research institutes or facilities whose function is the transfer of research results, and on the other hand supra‐business research projects of a pilot and demonstration character. In both cases, the objective is to increase the capacity for innovation and the sustainability of projects. .(Land Steiermark, 2006)

A specific programme was designed in Styria ‐ Measure 2.2 ‐ to target inter‐business research and innovation. The realised co‐financed project costs in Measure 2.2 cover a substantial amount of the total budget provided in Priority Axis 2 (about 63 %). At the end of the support period Measure 2.2 had met all targets, and 106 % of the planned investment was allocated. The measure is characterised by the high commitment rate (143.2 %) of public investment, € 13.2 million of public funds were used very efficiently. It needs to be pointed out, that under this measure the target group comprised joint research institutions and other academic institutions, industrial organisations, individual researchers and joint ventures. This meant that the main part of the co‐financial resources from these institution were included under public investment. Over the period 2000‐2006, 105 R&D‐projects were realised, instead of the expected 60 R&D projects, a highly welcome result.

Table 3.7 ‐ Measure 2.2 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2005)

Indicator Planned (2006) Realised (2000‐2006) Ratio realised/planned Total project costs (m €) 25,926,770 27,531,637.52 106.19% Input public funding (m €)12 9,204,798 13,198,142.15 143.38% Input ERDF funding (m €) 12,828,747.85 12,601,913.41 98.23% Private investments induced (m €) 3,893,224 1,731,581.96 44.48% Number of projects 60 105 175.00% Source: Objective 2 Styria, Status of Implementation, cumulative values since 1.1. 2000., Land Steiermark, Abteilung 14, Juni 2009

12 Own funds of project sponsors are counted as part of public funding.

38 Work Package 4: “Structural Change and Globalisation”

With respect to the two different support types under Measure 2.2 – i., RDTI – cooperative research projects, carried out by universities and RTOs or ii), building up co‐operative research infrastructure for companies, and research networks – one can see that the first type dominates. 94 cooperative research projects were carried out, whereas 44 science ‐ industry cooperations, and 13 science‐science cooperations were realised. The second type of support action is smaller but very representative in terms of increasing the technology level and competitiveness of the Objective 2 regions. Here, 15 new research and technology centres were established.

The cooperative research projects supported, are mainly located in urban regions. The newly established technology centres were located in peripheral area, creating regional technology strengths in these areas. Over the period 2000‐2006, 53 companies in the eligible area benefitted‐ from the newly established technology and research centres and 197 companies participated in research co operations support. The research projects show in total a remarkable innovative output: 130 new products/processes were developed in the eligible area. The measure was also very successful in terms of intended labour market effects. Net employment rose by 171.5 jobs in R&D. The amount of regional technology supplied in the programming period was also significantly higher than initially intended. (112 % of the planned square‐meters were realised)

Table 3.8 ‐ Measure 2.2 ‐ Comparison of selected planned and realised financial and material indicators (initial planning until 2005)

M 2.2: Inter‐company research and innovation 183 RTD / INNOVATION – 181 RTD / INNOVATION – cooperative research/Technology research projects conducted at Infrastructure for companies (in university and colleges particular for research centres) Project executing organisation= individual enterprise 29 13 Project executing organisation=limited partnership 4 1 Project executing organisation=corporation 9 5 Project executing organisation=regional authority 52 2 Project executing organisation=regional authority 2 1 Project executing organisation =RTO 35 15 Project executing organisation=universities 57 0 R&D‐ cooperation‐ business/science 44 5 Project location‐ urban area 60 7 Project location‐ rural area 29 10 Project location‐ geography. not determinable 5 4 Number of Projects 94 21 Number of R&D jobs before project 93 0 Number of R&D jobs after project 219.5 0 Realised number of newly created R&D jobs 171.5 0 Planned number of newly created products/processes 121 0 Realised number of newly created products/processes 130 0 Intra business R&D advisory proj. 0 5 Construction of know‐how transfer institution 0 1

39 Case Study – Styria (AT)

Construction of research/ technology centres 0 15 Infrastructure realised new/improved area 0 3,742.75 m2 Infrastructure planned new/improved area 0 3,447 m2 Source: Monitoring Data, OP‐ERDF Styria 2000‐2006, provided by Land Steiermark, Abteilung 14, Juni 2009

3.1.2 Contribution of selected measures to structural change and globalisation

Based on interviews with beneficiaries from businesses and scientific institutions , and on interviews with local authority representatives (Department 14 – Economy and Innovation of Styrian federal government, and from SFG, Styrian Business Promotion Agency Ltd), it seems that allocation of ERDF funds was generally directed towards fostering sectoral diversity, investment in upgrading technology infrastructure (industrial buildings, investments in special equipment for technological intermediaries or research labs) and initiatives for better cooperation between industry and science. All these initiatives maintained and completed existing regional economic development strategies (see chap. 2.1: Technology Policy Concept, Economic Strategy of the Federal State of Styria). The regional authorities also use and merge other regional and national public funds to finance projects related to intangible or risky investments, or to support related loans (e.g. for research projects, financial engineering).13

Measure 1.1 “Attracting new companies to the area”

Already in 1993, the Technology Policy Concept recommended to foster public initiatives to close remaining gaps in the supply chain of the regional industry. At this time such interventions were seen as a response to persistent obsolete sectoral specialisation patterns and to challenges in the modernisation of the regional production system. With the initiation of the ACStyria automobile cluster in 1995 a new additional need for the attraction of FDI arose. While the settlement of the Chrylser Eurostar production plant in 1991 initiated a first wave of new investments of supplier enterprises, soon the necessity of attracting new complementary firms to the cluster became obvious. The acquisition of Steyer Fahrzeugtechnik by MAGNA in 1998, led to an increase of automobile assembly projects in the region, thus implying an additional need for the location of specialised regional suppliers and development partners. Between 2000‐2006 in total 11 new companies were attracted to the region. Above all the newly, attracted in most of the cases international firms are intended to close gaps in the existing value chains, in the existing fields of competence, and, by means of high quality projects, to act not simply as ”extended workbenches“ but also as means of attracting research and development, distribution to the region. To sum up: beside of the sectoral distribution of the co‐financed projects , Measure 1.1 provided considerable further support for the automotive industry. According to the interviews with beneficiaries of Measure 1.1, this measure was the most important initiative financed by the ERDF, which directly attracted FDI into the region and fostered globalisation processes in Styria. The financial support from ERDF contributed substantially (see Table 3.9, up to 10 % of the total investments comes from ERDF) to attracting international firms and to locating subsidiaries into the region. FDI can be a useful strategy for stimulating regional innovation potential. The attraction of FDI is of

13 With respect to Measure 1.2 ”setting up innovative new companies” activities, the regional operator emphasised that the ERDF funds were essentially used to support initial business establishment e.g. developing a professional business plan, and not for developing products/processes/services as such.

40 Work Package 4: “Structural Change and Globalisation”

special interest for Objective 2 regions in Styria. FDI has been seen as a complementary strategy to the development of the endogenous regional potential since the late 1980s. As detailed described in Box 1. the Styrian subsidiary of the international ZF Friedrichshafen AG is dealing with car chassis technology. The positive effect of this direct investment has been confirmed by the interview carried out with the manager of the subsidiary in Lebring. The ERDF supports were used for attracting the company into the region and succefully set up a new subsidiary in Lebring (Oststeiermark). The attractive financial public support was one of the criteria to allocating ZF Lemförder to Lebring. 10% of the total investment has been covered by ERDF. By attracting this international company to the Objective 2 region, Styria has been able to further strengthen its competencies in the automotive industry and stimulate successful endogenous development. Exemplar 1 provides with the detailed description of the project “setting up the company ZF Lemförder Achssysteme GesmbH in Lebring” additional qualitative evidence for the effects of Measure 1.1 to the development of the ACStyria and thus to the sustainable change in regional specialisation.

Box 1 ‐ ZF Lemförder Achssysteme Ges.m.b.H

ZF Lemförder is a divisions/business unit of ZF Lemförder Group, specializing in original equipment and aftermarket solutions for the automotive industry. The ZF Lemförder Achssysteme in Lebring nearby Graz, Austria, was founded as a wholly owned subsidiary of ZF Lemförder in 2002. It is the first European axle assembly plant of the globally operating group. At first, the 22,000 m² site in Lebring consisting of a 6,000 m² assembly plant and an administration building covering some 1,300 m² was built.. ZF Lemförder Achssysteme in Lebring has approx. 14 employees ZF Lemförder Group is a leading worldwide automotive supplier for driveline and chassis technology. The company has a total workforce of 53,500 at 119 locations in 25 countries. Combined revenues for the group totalled 8.9 billion Euros (over $10 billion) in 2003. Effectiveness: ZF Lemförder, the Car Chassis Technology division of the ZF Group, develops and produces complete front and rear axle systems and chassis components for vehicles up to 3.5 t. Moreover, the automotive supplier‘s product range includes gearshift systems for manual and automatic transmissions. Since September 2003 the plant has been supplying front and rear axles ʺjust in sequenceʺ to Graz based Magna Steyr AG & Co KG, which manufactures the BMW X3 for the BMW Group. Sustainability of the Project Programme: Regional Programme of Styria 2000‐2006 Measure: 1.1 Duration of project: October 2001– June 2004 Funding: Total cost: 12,446,350.65 €, including € 2,488,564.91 from the ERDF

In addition to a qualitative assessments of Measure 1.1 also quantitative evidence can be used for further discussion of potential effects of the intervention. A first quantitative evaluation can be thereby done with data on targeted projects. Figure 3.1 provides an overview of the sectoral allocation of newly attracted and newly set up companies, co‐financed by ERDF in the Objective 2 region of Styria from 2000 to 2006. Generally one can say that the majority of ERDF supports were flow into large scale projects, whereas the ERDF supports were essential. Up to 10 % of the total investment has been realised by ERDF in these cases and more than 50 % of the public support come from ERFD. Measure 1.1 proved also successful between 2000‐2006 in terms of new company formation. The data reflects that 100 % of newly set up companies are in sectors related to supply chain of automotive industry, such as

41 Case Study – Styria (AT)

“construction and manufacture of machinery and equipment”; and one firm in sector “manufacture of motor vehicles” has been attracted between 2000 and 2006 into the region. The majority of ERDF support (29 %, € 2.1 million) have been flowed into these sectors. 18 % of the firm attraction have been realised in sectors “manufacture of basic metals” and “fabricated metal products”. 13 % of ERDF support in Measure 1.1 were spended in these sectors. Companies in business service related activities (such as “software consultancy”, “data processing”, “architectural and engineering activities and related technical consultancy”) have been supported as well. The fact that in the eligible area four newly set up companies were supported by ERDF, indicates that effort needs to be intensified in this direction. For further broadening the sectoral specialisation in Styria, support for spin‐offs in the industrial sector should be made a particular point of focus.

42 Work Package 4: “Structural Change and Globalisation”

Table 3.9 ‐ Measure 1.3 ‐ Allocation of projects

realised co‐ ERDF/co‐ Project Company Short Description End Location Sector financed Prj.‐ financed ERDF/public supports Start size Costs costs West‐ u. Computer and related ..construction of an IT system 2003 2004 Small 400,113.87 1.00% 4.00% Südsteiermark activities West‐ u. Manufacture of furniture; ..building up pelletizing system 2004 2005 Medium 2,770,103.31 1.60% 19.66% Südsteiermark manufacturing n.e.c. ..production facility for alternative Manufacture of fabricated 2006 2007 Obersteiermark Large 1,566,590.96 5.00% 21.72% heating system metal products, West‐ u. ..recycling of packaging refuse 2001 2002 Medium Recycling 689,031.07 5.00% 31.18% Südsteiermark Manufacture of fabricated ..surface processing 2006 2007 Oststeiermark Medium 13,466,463.10 5.00% 23.16% metal products ..secondary raw material extraction Attracting 2005 2006 Obersteiermark Large Recycling 3,289,946.19 5.00% 39.37% from waste Companies ..attracting an machinery 2005 2007 Obersteiermark Medium Manufacture of basic metals 1,446,865.98 5.00% 24.74% Manufacture of chem.. & ..attracting a biodiesel factory 2006 2008 Obersteiermark Medium 17,283,500.00 10.00% 57.14% chemical products ..attracting a new facility for Sewage and refuse 2002 2003 Graz Large 5,276,865.00 12.00% 72.73% producing alternative fuel disposables. .production of .innovative paper Manufacture of pulp, paper 2002 2004 Oststeiermark Small 9,490,204.42 14.99% 74.58% tubes and paper prod. ..conveying machinery for West‐ u. 2000 2001 Small Other business activities 1,320,266.92 15.00% 63.58% automotive Südsteiermark West‐ u. Manufacture of motor ..assembly facility for Chas‐system 2001 2003 Small 12,446,350.65 10.00% 50.01% Südsteiermark vehicles ect ..reestablishment of an supply chain West‐ u. Manufacture of machinery 2003 2004 Medium 4,154,046.69 11.64% 45.21% company for automotive Südsteiermark and equipment n.e.c. West‐ u. Manufacture of machinery ..production of cylinder 2006 2008 Small 3,170,164.60 7.00% 29.04% Newly set‐ up Südsteiermark and equipment n.e.c. companies ..creation of innovative gas and 2005 2008 Oststeiermark Large Construction 1,956,618.73 5.00% 18.87% fastening system ...investments in corrugated board Manufacture of machinery 2005 2007 Oststeiermark Medium 3,200,000.00 5.00% 40.65% processing and equipment n.e.c. Source: Monitoring Data, OP‐ERDF Styria 2000‐2006, provided by Land Steiermark, Abteilung 14, Juni 2009

43 Case Study – Styria (AT)

Measure 1.3 “Modernisation of enterprises”

Between 2000 and 2006, 200 projects, ‐ 100 conducted by SMEs, 100 by large firms,‐ have been supported by Measure 1.3 “Modernisation of enterprises”. The supported actions covered primarily physical investments of companies, which mean by definition investments in new technologies to strengthen the competitiveness. The strengthened entrepreneurial potential and broadened sector variety is seen as a path to reduce the vulnerability of the region and the susceptibility to crises situations. That measure allows for technological upgrading and facilitates the step‐wise implementation of new, more flexible processing. Regarding the influence of this measure on structural change, two routes evolved: First, financial support was granted through this measure for modernisation of physical infrastructure and for increase of the innovation potential of firms in Styria. One of the crucial hindrances for the modernisation of production processes in Styria, was based on the obsolete technical and technological equipment of the regional companies. Styrian company base, especially SMEs and large companies in the old industry, required supports for material investment urgently. Therefore industrial and trade projects intended to introduce new technologies and to develop new production lines. Second, for the reconstruction of regional specialisation, physical investments to start up SMEs in medium and high tech branches have been promoted. The measure was intended for both, private investors and companies, that wanted to locate production operations in the industrial or trade sector and/or innovation focused production in the region. Interviews with those responsible for implementation showed that Measure 1.3 was highly beneficial and on early SME support. Nevertheless, it appears that there have been some positive change in SME mentality and awareness concerning the importance of knowledge integration in products, production processes or services. In addition to a qualitative assessment of Measure 1.1 also quantitative evidence can be used for further discussion of potential effect of the measure on the Styrian industry. The updated mid‐term evaluation of the Objective 2 Program for Styria specifically analysed the way the program targeted the various sectors undergoing structural change.

Table 3.10 – Allocation the costs in Measure 1.3 according to NACE sectors (%)

N° of Co‐fin* Finance Private Financial Financial Financial projects total total Expendit ERDF Province State (%) costs (%) (%) ure (%) (%) (%) (%) NACE 45 Construction 0.17 0.18 0.13 0.11 0.00 0.23 0.17 NACE 20 Manufacture of wood and of products of 19.84 18.58 25.95 22.39 32.53 25.76 19.84 wood and cork(except furniture) NACE 72‐74 Real estate, renting and business 0.35 0.35 0.32 0.23 0.26 0.50 0.35 activities NACE 52 Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household 0.24 0.23 0.26 0.22 0.00 0.50 0.24 goods NACE 26 Non metal mineral products 1.65 1.69 1.48 1.90 2.01 0.55 1.65 NACE 21‐22 Paper and printing 1.07 1.15 0.70 1.18 0.00 0.51 1.07 NACE 23‐24 Manufacture of chemicals and chemical 2.25 2.53 2.50 1.64 0.00 5.29 2.52 products NACE 31 Manufacture of electrical and optical 3.18 3.28 2.69 3.30 2.39 2.05 3.18 equipment

44 Work Package 4: “Structural Change and Globalisation”

N° of Co‐fin* Finance Private Financial Financial Financial projects total total Expendit ERDF Province State (%) costs (%) (%) ure (%) (%) (%) (%) NACE 25 Manufacture of rubber and plastic products 0.84 0.68 0.70 0.70 1.00 0.52 0.84 NACE 34 Manufacture of transport equipment 6.24 6.21 6.40 4.05 9.26 7.72 6.24 NACE 28 Manufacture of basic metals and fabricated 35.64 35.83 34.61 41.91 27.52 29.31 35.63 metal products NACe 36 Manufacturing n.e.c. 0.19 0.18 0.22 0.22 0.00 0.35 0.19 NACE 15 Manufacture of food products; beverages 0.36 0.38 0.23 0.23 0.00 0.39 0.35 and tobacco NACE 17 Manufacture of textiles and textile products 3.69 3.78 3.24 2.39 5.04 3.22 3.69 NACE 29 Manufacture of machinery and equipment 4.43 4.26 3.48 4.43 4.57 1.47 4.43 n.e.c. NACE 27 Manufacture of basic metals and fabricated 18.48 18.97 16.06 13.84 15.14 19.70 18.48 metal product NACE 32 Manufacture of electrical and optical 0.93 0.95 0.85 0.60 0.00 1.73 0.93 equipment NACE 22 Manufacture of pulp, paper and paper 0.21 0.22 0.19 0.14 0.28 0.19 0.21 products; publishing and printing Source: Mid‐Term evaluation Report of 31.12.03for SPD 2000‐2006 Objective 2 Styria

About 30 % of all projects concentrated on seven branches (wood processing and working, production of metal goods, metal production and working, supplies in automotive sector, radio‐, TV and communications engineering, engine building, production of glass, and goods made of stone and soils). Approximately 63 % of all public funds and 60 % of ERDF‐funds flow into these branches. Among the sectors undergoing change, the one receiving most support was “manufacture of fabricated metal products”, with 36 % of the total support amount. This sector has an old industry tradition and is still undergoing an important restructuring. In the period 2000‐2006 representative firms in the metal industry were well developed, and caused relatively little pollution14.. In Measure 1.3 about 10 % of all approved projects are located in enterprise‐ related services and about 9 % of total public funding and ERDF‐funding flow into this branch. As flagship project supported by Measure 1.3 should be mentioned the company “Sensor Dynamics AG”, a start‐up company based in 2002 in Lebring in the TIME sector. The firm develops and industrializes customer‐specific micro sensor systems through complete design solutions from analysis and development to design optimization and manufacturing. The firm is a perfect example for business start‐ups, which are able to strengthen the high‐tech sector in Styria, especially in the regionally priorized automotive industry and electronics sector. By ERDF co‐financing project investment important technical infrastructure was supported as start‐off aid. The physical investment concentrated on machines and machinery equipments. As described in Box 2. the company “Sensor Dynamics AG” acts successfully on the international market on long term base.

14 Michael Peneder (1999), The Austrian Paradox: ʺOldʺ Structures but High Performance? Austrian Economic Quarterly 4/1999

45 Case Study – Styria (AT)

Box 2 ‐ Sensor Dynamics AG

Sensor Dynamics AG was funded in 2002 is the micro‐sensor integration company. Sensor Dynamics AG has 70 employees in Lebring and is dealing with micro and wireless sensor products in TIME sector. Aim of the company is to develop and supply high volume customer‐oriented components based on fail‐safe, wireless and MEMS technology for automotive and industrial applications with a high level of reliability and driven by comprehensive system understanding and know‐how. Effectiveness: Sensor Dynamics is a rapidly expanding semi‐fables semiconductor company that focuses on innovative sensor solutions for high volume applications in automotive, aerospace and industry sectors. Sensor Dynamics develops and supplies fail‐safe micro and wireless semiconductor sensor systems, primarily for automotive key accounts. With its head quarters in Graz‐Lebring, Austria, during the Period 2003‐2006 Sensor Dynamics has been opened subsidiaries in Italy, (Pisa) , Germany (Itzehoe), Slovenia and France. Sustainability of the Project: One of the most long term activity of the company is the science collaboration with the (ISiT) Fraunhofer Gesellschaft. With help of cooperative projects Sensor Dynamics AG has already been able to contractually secure access to the fast growing market of car electronics. In 2006 further investments about € 200,000,000 in the success Sensor Dynamics AG from the consortium of investors from Austria (Austria Wirtschaftsservice GmbH) Germany (Deutsche Effecten‐ und Wechsel‐Beteiligungsgesellschaft) and Switzerland. In order to stimulate the incorporation and sustainable development of highly innovative companies in Styria with above‐average market potential and growth opportunities. In 2009 the company take his huge order, about 370,000,000 $ in his history. The company has to develop an microelektromechanism sensor for a client from USA.

Programme: Regional Programme of Styria 2000‐2006 Measure: 1.3 Duration of project: August 2003– Oktober 2005 Funding: Total cost: € 743,710.79, including € 2,600,000.0 from the ERDF

Measure 2.1 “Setting up/expanding innovative new business parks”

Between 2000 and 2006 a number of new technology and firm formation centres, in form of “Impulse Centres” have been created as part of the regional renewal effort, offering a range of services from administrative support to technology transfer and consultancy. The primary role of these centres is seen to lie not only in their functions as promoters of regional technological and sectoral strengths and as agents for knowledge and technology transfer, but also in their ability to make cooperation production processes and network activities public. Achieving improvements in present levels of personnel of the participating firm was a prerequisite in this respect. Measure 2.1 “Setting up/expanding innovative new business parks” aimed to the development and modernisation of business‐proximate and technological infrastructures of a region by means of constructing business parks (research and start‐up centres, technology parks, impulse centres) and the expansion and profiling of existing facilities. The support of such projects provides a direct boost for the foundation or location of new enterprises, at the same time assisting the creation of new, qualified jobs.

46 Work Package 4: “Structural Change and Globalisation”

Figure 3.1 ‐ Location of impulse centres supported by ERDF according to the technology focus in Styria

Quelle: JR Illustration, GIS, Land Steiermark 2009, SFG, Impulse Centre Styria, 15

In Styria 17 centres were created during the supporting period co‐financed by ERDF. As represented in figure 3.1.1.1 each of the impulse centres were dedicated to an own technological focus, to build up regional competitiveness. Supported members were located mainly in the rural area of Oststeiermark and in Süd‐ Weststeiermark. These regions show stereotypical elements of structural weakness such as the agricultural background, the low level of entrepreneurial spirit or the lack of knowledge transfer institution. Medium‐ and low‐tech sector plays also a significant role in these regions. Especially in the medium‐ and low‐tech sector in Styria, the change in a firm’s production organisation, led by technological upgrading and restructuring, was a major challenge. This includes changes in the implementation of new collaborative patterns of production and strengthening of core‐competences of the region industrial base. New collaborative patterns of production require a deep labour division among firms and a better understanding of SMEs’ needs. Impulse centres, offering infrastructural requirements for participated companies and spatial framework conditions, were important factors in the re‐orientation of production systems especially in the rural area of Styria. The volume of the impulse centres is crucial for the profitability of the centres. Up to 50 firms are located in one impulse centre and participating in the business life of the centre. As the interview with beneficiaries

15 Kapfenberg: New materials, lasertechnology; Lebring‐St.Margarethen: EDV and automation; Liezen: Plant construction, engineering; Niklasdorf: Material science, surface technology; Bad Radkersburg; Transnational services; Unterpremstätten: E‐Business, Informationstechnology and Telecommunication; Zeltweg: Wood technology; Bärnbach: IKT ; Mureck: Production and manufacturing; Eibiswald: Mechatronics, metal processing, electronic engineering; Frohnleiten:; Fürstenfeld; Engineering thermodynamics; Georgsber:v Automotive, Aviation, Environment, Software Development; Hartberg: Recycling management, sustainability ; Wildon :Agrochemistry; Vorau: Building services engineering, plant engineering; Weiz: Innovation, Energy

47 Case Study – Styria (AT)

confirmed the Styrian impulse centres imply to adopt flexible modes of collaboration, and create substantial and sustainable production processes in the targeted technology fields. The interviewee emphasized that the impulse centres reduce the risks inherent to entrepreneurial activity, providing a ground for start‐ups, co‐ operation and technology transfer in the long term. Technological focus of the Impulse Centre Weiz lies on renewable energies. Since 2000 issues concerning renewable energy were stressed in the district Weiz, as “cutting edge” region in this technology field in Austria. A special characteristic of the impulse centre in Weiz is the fact, that two sequent construction phases – due to the international competitiveness (and hence high export share) of the companies in the impulse centre and the successful cooperations of these companies – have been co‐financed by ERDF.

Box 3 ‐ Weizer Energy‐ Innovation‐ Centre Ltd. The Energy and Innovation Centre of Weiz is an innovative and trendsetting business centre. Here, 30 entrepreneurs and organisations find office and storage rooms, which are conceived after the latest cognitions. The W.E.I.Z .I. is located in the centre of Weiz. The optimal infrastructure is supplemented by flexible room sizes and a sophisticated use and energy concept. The extremely low energy consumption (<15kWh/m 2a) makes the W.E.I.Z. I to a pilot project; the first passive office house in middle Europe of this size. Function: Service Centre (Marketing Assistance, Contacts for Cooperation and Knowledge Transfer, Project Transaction – Regional and International, Event Management (media room) ‐ Office Buildings & Research Effectiveness: It is an attractive energy concept with energy consumption below 15kWh/m² per year Impact: As a competent partner of economy, the Weizer Energy‐ Innovation‐ Centre is active for the development of the region Ost Steiermark and to connect the participating firms in international cooperation. The regional economy gets strengthened by operational cooperation and the extension of the Styrian economy network (e.g. EuroSyn). Additionally the centre actively uses the possibilities of internationalization of economy and connections to other regions are established. (Albania, Belgium, Czech Republic, Estonia ,Finland, Germany, Hungary ect.) The foci of the W.E.I.Z. I is: · Energy (research, planning and development of products as well as services) · Innovation (new services, products and materials; sustainable economic management) · International cooperation in the area of research and development, economical cooperation and EU‐projects. W.E.I.Z. I is focusing on Micro sensor component manufacture (Supported by partners like Cadence, ST Microelectronics, TSMC and ASE Korea, ect). All technologies, fabrication operations and business processes are in compliance with the rigorous standards of the automotive industry. The new developed product portfolio of the centre is: · inertial micro‐sensor systems · intelligent sensor interface · wireless sensors Programme: Regional Programme of Styria 2000‐2006 Measure: 2.1 Type of Construction: passive energy office house (largest wooden skeleton construction of Europe) Duration of project: 15.01.1999 ‐ 26.10.1999 Funding: Total cost: € 3,300 000 , Input ERDF Funding : €484,000.00, Input Public Funding (Bund): € 257,000.00, Input Public Funding (Land): € 257,000.00 Total Area: 2,092 m² (without external area) Rentable Area: 1.346 m² Sustainability of the Project: W.E.I.Z. II ʺCool Boxʺ(heating and cooling with terrestrial heat)

48 Work Package 4: “Structural Change and Globalisation”

Together with the W.E.I.Z. I, the new building constitutes a forecourt (“square of energy”) and is a further element of the ecological area rehabilitation. W.E.I.Z. I and W.E.I.Z. II are affiliated with each other by the common main entrance. (Common presentation and Front Office). T he Research and Founder Centre W.E.I.Z II was opened in the year 2007, where a new energy concept, which is called ʺThe Cool Boxʺ, was implemented. Both objects punctuate their innovative standard of being a modern and trendsetting business centre. Duration of construction: 21.4.2006 ‐ 11.05.2007 Total cost: € 3,300 000 Total Area: 3,330 m² (without external area) Rentable Area: 2,200 m²

Measure 2.2 – “Inter­company research and innovation”

Support offered within Measure 2.2 proved interesting features. As with other countries and regions, innovation and R&D in Styria are mainly promoted by a few big enterprises. However, the region should try to broader this field to reach an increasing number of SMEs. For this purpose, support of Measure 2.2 concerns on the one hand non‐university research centres (R&D infrastructure) such as regional research institutes or facilities whose function is the transfer of research results, and on the other hand supra‐business research projects with a pilot and demonstration character. In both cases, the objective is to increase the capacity for innovation and the sustainability of projects. To demonstrate the impact of this measure, we would like to introduce two exemplary “flagship” projects. The first one was the “Technofit programme” developed during the period 2002 to 2004. Technofit was managed by two regional SMEs and two technology centres. In an interview with the member of the provincial government of Styria, has been considered, that this programme was the most innovative element of regional development strategy during the period 2000 to 2006. The funding scheme in the field of knowledge transfer was described as unique. The programme enabled the development of new projects, processes, methods and services. During the two years that it was in operation, Technofit financed 29 projects as part of two packages of measures: finding and evaluating ideas, and selecting and implementing them. The programme was subsidized with a total of € 4 million, of which € 2.8 million were from the ERDF. Although the national government decided not to continue the programme in subsequent periods, some of the most successful projects tried out during the Technofit are still going to be generalized.

49 Case Study – Styria (AT)

Box 4 ‐ Technofit in a nutsell The objective of the project was to broaden the regional innovation basis and address the specific needs of SMEs established in peripheral regions of Styria with no or little experience in the field of R&D. Innovation support was provided in several ways: · events and seminars for innovation awareness and methods · individual innovation audits ʺon‐the‐shop‐floorʺ · ʺquick fixesʺ by arranging expert meetings · brokering of innovation projects with R&D partners Effectiveness: During this one‐year project not all of the targets were met, e.g. events were attended not by 200, but merely 160 SMEs, and only six instead of eight SMEs were incorporated within innovation projects. However, there were two very positive project outcomes: Of the 45 SMEs involved a higher than expected number (20) took up the option of an individual expert meeting with ‐ even more significantly ‐ a very positive spin‐off effect from the project. Further given the decision to carry on with a similar project in 2006/2007 (see “expected project sustainability”), many of the SMEs contacted in 2005/2006 took the chance to become involved in projects in 2006/2007. In total, over a two‐year period, some 90 individual innovation audits “on the shop‐floor” were conducted, resulting in 25 projects as of April 2007, many of them with matching funding from regional and national programme. A key lesson to be learned therefore was that it may take more than a year to overcome existing barriers in inexperienced SMEs and that identifying the right time and right place for starting collaborative innovation projects with academic institutions requires patience. The decision of the funding institution (Styria region) to carry on with this transfer network has started to bear more fruit after a two‐year period. Impact: Apart from the 25 projects initiated with SMEs hitherto inexperienced in innovation collaboration (see above), some other positive changes included: · establishment of a regional virtual technology transfer network for SMEs without the need for additional infrastructure investments; · priming of new businesses for innovation collaboration and, therefore, for existing monetary funding schemes; · clarification of what the regional knowledge base can do for individual SMEs; · individual grooming of SMEs for the new 2007‐13 EU funding period (with a strong focus on innovation and competitiveness) where firms are given the opportunity to test new collaboration formats. The modest amount of public subsidy for this typical “soft” project has certainly had a pronounced leverage effect: a new segment of the regional economy has been addressed and broad sections of it have taken the opportunity to become involved with academic institutions, in many cases for the first time in the business’s history. Given that the outcome of these first‐time collaborations has been positive for both sides, this should lead on to follow‐up projects and, in the longer term, contribute in a very “hands‐on” fashion to a broadened innovation base. These SMEs will not only be more competitive, but also better adapted to acting as supply chain partners with large, intensive R&D businesses on regional and international markets. Sustainability of the Project: As a result of the project meeting the expectations of the funding institution, and of the transfer team’s request for a follow‐up to the initial project activities, a similar project was launched for the period 2006/2007 in order to ensure continuity. This successor (TECHNOFIT PRO 2006/2007) was financed by the Department for Science and Research of the Styria Provincial Government using ERDF funds. At the beginning of this project, it was decided that SMEs in phasing‐out regions should not be assisted by the transfer team, possibly since it was not clear then what the geographical definition would be of the 2007‐13 Structural Fund regions for Styria. A further continuation. Programme: Regional Programme of Styria 2000‐2006 Measure: 2.2 Duration of project: April 2005 – March 2006 Funding: Total cost: € 194,825, including € 97,412 from the ERDF

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As for the supporting period of 2000‐2006, and as based on the technology strategic paper of the EU and on the mid‐term evaluation of the ERDF in Styria, and a new thematic research field, nanotechnology gained public attention. Nanotechnology promises to increase the efficiency in traditional industries (electrical engineering, material science) and brings radically new applications through emerging technologies. Nanotechnology was such a “re‐labelling” the Styrian strong technology oriented industry branches and contributed to increased innovation potential as well as to new dimensions of sectoral specialisation. Research projects in nanotechnology, a new strength in Styria, achieved high priority both at regional level and also in the supporting Measure 2.2. Some path breaking initiatives provided cornerstones for nanotechnology in Styria. One of them was the NANONET‐Styria, which was founded as a Styrian nanotechnology network in autumn 2001. The network supports and focuses existing expertise and interests in the field of nanotechnology and seeks to establish nanotechnology in Styria on a long‐term basis. Successful projects here include the NANO Centre Weiz, and the Nano SURFACE‐Engineering Centre Leoben.

Box 5 ‐ NANO Centre Weiz in a nutshell The centre was established to provide establishing a physical research centre for basic and applied research and development in the fields of process und device development with the focus on organic opto‐electronics and sensor devices. Scientific activities at NanoTecCenter Weiz Forschungsgesellschaft mbH (NTC Weiz GmbH) open up a range of new possibilities in the research and technology of “nano‐structured materials, process and component development in optoelectronics, sensor technology and nano‐analysis”. The company works in close cooperation with scientists at Graz University of Technology and Joanneum Research in order to ensure optimal use of research expertise and of existing R&D infrastructure. Cooperation with colleagues in science and industry is exercised in many ways at both national and international level to ensure the continued development and implementation of scientific knowledge in the field of nano‐ sciences and nanotechnologies, including basic research and methods, as well as the associated R&D services. The centre is located in WEIZ II ‐ Weiz is in Ossteiermark, perfectly embedded in the industrially relatively under developed Objective 2 Area of Styria. The cost of the centre, including R&D – infrastructure was € 3.0 million Of 20, comprises scientist, official students and management personnel Effectiveness: In line with the objectives defined in the shareholders’ agreement, NTC Weiz GmbH represents a key focus of Styrian and Austrian nanotechnology activities in the research and technology of “nanostructured materials, process and component development in optoelectronics, sensor technology and nano‐analysis”. Activities are carried out in coordination and cooperation with the research units of shareholders as well as with those of other national and international partners and companies. Key elements include the NTC´s involvement in the Styrian nanotechnology initiative NANONET‐Styria and the active role it plays in the ongoing development of this communication and cooperation platform comprising representatives from science, industry and the public sector. NTC Weiz GmbH’s activities range from scientific projects, research services and contract research projects through to joint process and product development with companies, as well as technology coaching for industrial companies and small and medium‐ sized enterprises. The centre follows medium and long‐term technology goals, so as to develop scientific, technological and industrial applications in the fields of sensor technology, has gained national and international recognition as a leading player in the fields of research and development; and engages in active and close cooperation with regional, national and international research partners. In the latter function centre has to regional knowledge‐creation. This manifests itself both in the high qualifications and educational standards of staff as well as in the expertise and patents held by NTC Weiz GmbH. Sustainability of the Project: The centre makes an important contribution to the continued strengthening of Weiz and Styria as business locations through cooperation with the local Institute of Nanostructured Materials and Photonics, the Christian Doppler Laboratory for Nanocomposite Solar Cells as well as with further institutes, research units and staff Graz University of Technology. This helps consolidate NTC Weiz GmbH over the long term and supports development

51 Case Study – Styria (AT)

of the region as a business location. Furthermore, it also forms the basis for the transfer of knowledge to industry, leading to new products, technologies and processes. Programme: Regional Programme of Styria 2000‐2006 Measure: 2.2 Duration of project: Mai 2006 – March 2008 Funding: Total cost: € 2,96,.455.96, including € 2,221,091.9 from the ERDF

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3.2 Assessment of the effects on institutional capacity and policy learning

The overwhelming view from interviewees in Styria was that Structural Funds Programme in total since 1995 have been important in affecting institutional capacity in the region. In the round, the Structural Funds Programme have been important in establishing concepts such as partnership working in the region. Throughout the period in which Styria has been in receipt of ERDF money, the region has built up a level of expertise around European funding and project management. The day‐to‐day work with ERDF induced some professionalism in the regional governance. People working in and around ERDF supports and projects have gained knowledge and skills through their involvement in the programme, and this may relate broadly to project management or more specifically to the skills required for particular activities. One respondent described this as just a “very effective learning process for a small number of people involved in the game, whereas by handling with ERDF the administrative personal are already working up to the limits of their capacity”. Regional programming for structural change did in the year 2000 already have a long lasting tradition in Styria. One response explained that the 2000‐2006 programme was instrumental in bringing together a more collective approach based on a history of (at that point) ten years of ERDF experience and consequently maturing relationships between partners. Nevertheless ERDF programming and funding could bring additional benefits for the already existing planning culture. Styria was between 2000 and 2006 subject of large amounts of regional and national funding. ERDF have an increasingly important source of funding for fostering structural change in the region further on. As regards the implementation of the programme by the authorities, partnering between local and regional authorities is strong in the region of Styria. This may be due to the strong regional identity reflected in all aspects of the economy, or to the – at this time‐ extensive experience of the region with ERDF programme. It is evident by the commitment of all actors in the different steps of the programming period (elaboration of the programme, adaptation of the measures over time, participation in different steering committee meetings), by the increased use of global subsidies and the relatively wide diffusion of appropriate monitoring tools (such as WIBIS STEIERMARK, “Politico‐economic Reporting and Information System, Styria”). The most important advantages, stressed by the respondents were, that the time frame for ERDF for planning of six to eight years brought also additional benefits and guarantees for regional policy actors. Regional funds, necessary for co‐financing the ERDF contributions had to be budgeted a long time in advance, allowing therefore for stable planning and implementing conditions. These conditions proofed very important for beneficiaries especially in the measures that were addressing infrastructure development, since many project needed to be developed several stages.( second construction phase impulse centre in Weiz) ERDF provided long term, secure financing for large scale projects (i.e., attracting large foreign companies.). Something which has been identified as another key aspect of the programme by almost all respondents was the emphasis it placed on a more targeted approach to development projects in the region and a shift towards more in‐depth assistance towards individual firms. Evaluation culture in Styria was very positively influenced by structural funds. Applying evaluation methods on regional support programme were not on daily basis before. Since the Structural Programme have been run in Styria, collection monitoring data and

53 Case Study – Styria (AT)

indicators for suitable evaluation studies are essential part of policy learning,‐ not only on the SPD programme but also on all other regional programme. The compulsory elements of ex‐ante and mid‐term evaluations associated with ERDF programming brought more awareness of evaluation as a source for policy learning in all stages of the policy cycle to regional policy makers and members of agencies. More broadly speaking, interest in evaluation results can also be noted by beneficiaries form the sphere of R&D institutions and intermediary organisations. The produced mid‐term evaluation of Objective 2 region of Styria was key in bolstering the attitude towards company support, identifying the most successful support funded through the Programme’s financial measures‐ for example Measure 1.1 and 1.3, and the more intensive assistance offered to firms through. Respondents suggested that in terms of providing a strategic lead and framework for regional policy thinking, the 1995‐2000 as well as the 2000‐2006 Structural Funds Programme had been key in the region. The majority of respondents suggested that the first existing regional development strategies were key document, and that the SPD had itself benefited from the analysis undertaken in preparation of these documents. In Styria, ERDF monies are primarily a funding stream for activity proposed in the regional development strategies. In some cases new priorities regarding their content in the ERDF measures have been evolved between 2000 and 2006. Based on public discussion and political learning process or on the references of the mid‐term evaluation of the ERDF in Styria, new thematic research field gained public attention. (Such as nanotechnology in Oststeiermark or materials research in Obersteiermark). An interesting point was made by an respondent who described the ERDF supports less enthusiastically. He described that the administrative burden of ERDF was largely over‐blown and that the Objective 2 supports generally are considered as “complicated”. ERDF supports was mainly associated with administrative burdens and bureaucracy (long application forms, complex implementation and financial management, etc.). Another important difficulty faced by the regional operators was the need to conform to zoning requirements. The mix of different areas receiving funds was responsible for great confusion on the financing of projects. Taken as a whole, ERDF supports in the region has clearly had mixed results in terms of outputs, with some areas of activity identified as relatively successful by respondents, and others highlighted which in retrospect have been less so .A benefit of the programme though has been the capacity they have brought to the region to finance activity which might otherwise not have taken place, or to bring an additional level of funding to existing regional plans. Outcomes of programme are thus felt to be proportionate higher than the levels of funding which went in to them.

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4. Conclusions: key findings and main message

Key findings

Styria had been in the past mainly an industrial region, specialised in steel and iron industry. Structural change and internationalisation issues were of high relevance in Styria at the beginning of the programming period, since the region has been confronted with massive structural problems since the beginning of the 80s. The 1980s and the beginning of the 1990s were characterized by a low level of growth of the regional output, a tightened labour market and structural problems such as an insufficient rate of firm foundations and the concentration on the less knowledge intensive, but resource intensive steel and iron industry. The regional specialisation in these low technology industry sectors lead to an increased vulnerability of the regional economy to exogenous shocks. The main research question of this case study was to which extent ERDF interventions have helped on the one hand to foster the sectoral diversity in more technology oriented niches and on the other hand to increase industry science cooperations in the eligible areas of Styria (Austria). In particular, did the ERDF support lead to a sound development of the automotive industry as promising new sector allowing Styria to catch up in regional economic growth and employment? Given the emphasis of the programming document, the case study focuses on three specific types of measures that have been supported: attraction of new firms to the region, the modernisation of enterprises, innovative new business parks and the promotion of collaborative R&D projects. Based on interviews and on anecdotic evidence the general impact of ERDF measure has been assessed positively. In Styria the challenges of structural change were a key issue for the ERDF programming strategy 2000 to 2006.

1. ERDF interventions were successfully addressing problems of regional specialisation and induced a shift to new innovation driven sectors

Styria showed in the past characteristics of an ‘old industrial area’, dominated by an industrial monostructure of sectors such as metal manufacturing; the region was thus extremely vulnerable to exogenous shocks. The reorientation towards a sectorally diversified regional economy and to knowledge intensive niches was the paramount challenge for the regional economic development of Styria. ERDF funded projects played in the period 2000 to 2006 an important role in supporting the development of new regional value chains centred around the automotive industry and its supplying sectors (like machinery, electronics etc.). The projects funded in this period have led to new patterns of regional specialisation with a more technology oriented profile. Overall the ERDF measures have contributed to a shift towards new innovation driven regional specialisations, but were focused so far more on building support institutions and physical infrastructure than on direct job creation.

55 Case Study – Styria (AT)

2. ERDF interventions were able to stimulate an adequate response to structural change challenges arising from the problem of inflexible regional production systems in the low technology sectors

Styria was characterised at the beginning of the programming period by significant differences in firm structure, by a lack of strong local supply‐chain linkages and intra‐industry collaboration, by obsolete production processes and by inflexible employees. The modernisation of the production systems took two different routes in Styria: Firstly, a shift from mass production towards flexible specialisation and secondly the reorientation to more collaborative patterns of production and stronger supply chain linkages. Broadly we consider that the activities funded under the ERDF programme 2000 to 2006 have had a positive effect on collaboration pattern of firms, and may suggest a beneficial outcome at regional level in terms of an improved production system, flexible business environmental and stronger intra‐business relations.

3. Structural funds did allow for a completely integrated planning approach, encompassing not only traditional domains of regional policy but also innovation, research and technology

Public interventions addressing structural change in Styria did have a long tradition going back more than 20 years. The region elaborated its own regional development strategies at the beginning of the 90´s , which built the basis for ERDF programme. In 2000 therefore there was enough room for an integrated planning approach ensuring greater coherence between all the different relevant policy domains. Looking at the evidence collected in this case study, the following elements can be seen as strengths of the Objective 2 Programme in Styria: multi‐sectoral programming, more professionalism in the sense of improved evaluation, monitoring and a stronger systematisation of support procedures. In addition ERDF funding, is to be seen as an increasingly important source of funding for fostering structural change in the region further on.

Main message

The case study has examined four measures funded under Priority 2 of the 2000‐2006 Objective 2 Programme, considered to be the most relevant in assessing the contribution of the programme to structural change. These were tested in relation to three of the five hypotheses outlined in the conceptual framework underpinning the research project, broadly concerning ‘regional specialisation’ ,‘production‘ system and ‘innovation potential’. All three hypotheses tend to be validated by the evidence collected in this case study.

According to the several dimensions of structural change, first of all the regional specialisation, secondly the production system and thirdly the regional innovation potential have been of high relevance in the case of Styria. Structural change was in Styria associated with a shift in sectoral specialisation: Firstly with a further shift from industrial monostructures towards sectoral diversity, secondly towards the service sector, and thirdly with a shift from less to more knowledge intensive companies. As for the modernisation of production systems in Styria further efforts to increase the collaboration between regional companies and for closing the gap in the supply chains – mainly in the automotive sector‐ seemed to be the most effective way. Innovation potential in Styria has been characterised by a strong concentration of innovation activities on a few firms compared to a majority of SMEs in the productive sector, which have not caught up yet regarding innovation in‐ and output. The gradual extension of the innovation base, i.e. in gaining the attention of

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companies (especially SMEs) who have so far not shown any interest in being part of technological innovation processes was thus an actively pursued strategy.

Generally it might be concluded that the selected measures were successful in term of planned number of projects, quite effective in terms of attaining socioeconomic objectives with respect to the labour market. One of the marrow roles of ERDF in Styria was the complementary support to regional development programme for fostering structural change. ERDF accented the regional strategies and contributed positively to changing in sectoral specialisation, modernisation of production process and improve the innovation capacity of Syrians companies.

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5. Annexes

5.1 Statistical tables

Table 5.1 ‐ Taxonomy of objective 2 eligible areas (NUTS3)

% of regional Population in Obj 2 Urban/rural Population, 2004, thousands population, within areas, thousands category* Objective 2 areas At221 Graz 373.2 0 0.0 21 At222 Liezen 81.6 59.4 48.5 32 At223 Östliche 172.8 82.9 143.2 21 Obersteiermark At224 Oststeiermark 268.5 74.8 200.9 31 At225 West‐ und 190.9 89.1 170.1 31 Südsteiermark At226 Westliche 107.7 77.5 83.5 32 Obersteiermark * 1 = predominantly urban; 21 = intermediate rural, close to a city; 22 = intermediate rural, remote; 31 = predominantly rural, close to a city; 32 = predominantly rural, remote regions Source: Applica – Ismeri – wiiw. Ex Post Evaluation of Cohesion Policy Programmes 2000‐2006 financed by the European Regional Development Fund in Objective 1 and 2 Regions. WP1, Task5 Final report. Note: Please note that table does not include Ob.2 phasing‐out regions.

Table 5.2 ‐ Regional performance in comparative perspective (NUTS2) ‐Basic data

Regional Indicator Unit ∆(%) 1995 2000 2006 00/06 Population Thousand 1,186 1,182 1,203 1.7

GDP per capita Eur PPP 19,300 21,900 26,900 23

Gross Value Added Eur mln basic prices 20,607 23,282 29,280 25.7

Employment rate % employed on number of people aged 15 and over n.a 54.4 56.3 4.3 Unemployment % unemployed persons on number of people aged 15 and n.a 3.2 3.9 21.9 rate over National Indicator Unit ∆(%) 1995 2000 2006 00/06 Population Thousand 7,943 8,011 8,282 3.4

GDP per capita Eur PPP 22,900 25,900 31,100 20,1

Gross Value Added Eur mln basic prices 164,082 186,587 232,904 24.8

Employment rate % employed on number of people aged 15 and over n.a 56.4 57.3 1.6 Unemployment % unemployed persons on number of people aged 15 and n.a 3.5 4.7 34.3 rate over

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EU15 Indicator Unit ∆(%) 1995 2000 2006 00/06 Population Thousand 373,362 377,734 390,681 3.3

GDP per capita Eur PPP 18,055 23,117 26,652* 15.3

Gross Value Added Eur mln basic prices 6,058,125 7,822,555 9,735,114 24.4

Employment rate % employed on number of people aged 15 and over n.a. 44.4** 53.4 20.3 Unemployment % unemployed persons on number of people aged 15 and n.a. 8.3 7.8 ‐6.0 rate over * Data for 2005. ** Data for 2001 Source: InTeReg processing of Eurostat data 2009

Table 5.3 ‐ Socio‐economic change and human capital (NUTS2)

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Share of people aged 25‐64 participating in % 3.4 12.2* 258.8 4.2 12.8* 204.8 8.0 11.4* 42.5 education and training Share of population aged 25‐64 with tertiary % 11.7 16.6* 41.9 14.1 17.6* 24.8 20.3 25.1* 23.6 education Share of students at tertiary level % 19.2** 17.6 ‐8.3 ‐ ‐ ‐ ‐ ‐ ‐

Crude rate of net migration % 0.3 4.6* 1433.3 n.a 3.1 ‐ 3.2 4.2 31.3

Long‐term unemployment rate % 20.8 25.1 20.7 26.9 27.4 1.9 46.08** 42.32 ‐8.16

Share of 25‐34 years employed on total employment % 28.8 22.5 ‐21.9 28.4 22.5 ‐20.6 n.a. 23.6 ‐ * Data for 2005, ** Data for 1999 Source: Core team processing of Eurostat data, InTeReg processing of Eurostat data 2009

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Table 5.4 ‐ Regional specialisation (NUTS1)

Employment by sector

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Agriculture % on total employment 8.3 7.9 ‐4.9 5.8 5.5 ‐5.1 4.3 3.6 ‐16.1

Industry % on total employment 34.0 31.3 ‐7.7 30.2 28.2 ‐6.8 28.9 26.6 ‐9.1

Services % on total employment 57.7 60.8 5.2 63.9 66.3 3.7 66.4 69.6 4.8

Gross Value Added by broad economic sectors

Regional National

Indicator Unit ∆(%) ∆(%) 1995 2000 2006 1995 2000 2006 00/06 00/06 GVA in Agriculture, hunting, forestry and fishing % on total GVA 3.9 3.1 2.6 ‐14.0 2.6 2.0 1.7 ‐18.8

GVA in Mining and quarrying; electricity, gas and water supply % on total GVA 27.3 28.3 28.1 ‐0.8 22.9 23.3 23.3 0

GVA in Industry % on total GVA 33.8 37.3 35.7 ‐4.3 30.5 31.3 30.2 ‐3.4

GVA in Construction % on total GVA 7.5 8.0 7.6 ‐5.2 7.9 7.5 6.9 ‐7.7 GVA in Wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods; hotels and restaurants; transport, storage and % on total GVA 19.5 19.7 18.9 ‐4.0 24.6 24.6 23.3 ‐5.1 communication GVA in Services (excluding extra‐territorial organizations and bodies) % on total GVA 60.5 61.8 61.6 ‐0.3 67.2 67.7 68.1 0.7

GVA in Financial intermediation; real estate, renting and business activities % on total GVA 17.9 19.4 22.1 13.9 19.4 21.5 24.1 12.1 GVA in Public administration and defence, compulsory social security; education; health and social work; other community, social and personal service % on total GVA 24.0 21.4 20.6 ‐3.8 22.6 21.1 20.7 ‐1.8 activities; private households with employed persons Source: InTeReg processing of Eurostat data (2009)

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Table 5.5 ‐ Innovation potential (NUTS2)

Regional National EU15 Indicator Unit ∆(%) ∆(%) ∆(%) 1995 2000 2006 2000 2006 2000 2006 00/06 00/06 00/06 Business enterprise % of GDP n.a 2.2* 2.1** ‐4.5 1.4* 1.7 20.9 1.1 1.3 18.2 expenditure on R&D – BERD Gross domestic 1.9 expenditure on % of GDP n.a 3.3* 3.2** ‐3.0 2.5 31.6 1.8 2.0 11.1 (02’=2.14) R&D ‐ GERD Employment in % on total high‐tech 3.1 4.1 3.5 ‐14.6 4.9 4.1 ‐16.3 4.7 4.6 ‐2.1 employment sectors on total Number of Units per total million n.a 931.8 1270.2 36.3 n.a n.a ‐ n.a. n.a. ‐ publications inhabitants 04’:2.5 R&D personnel % on total 04’:1.9 n.a 02’: 2.2 06’: 1.8* n.a. n.a. ‐ in all sectors employment 06’:2.1 2.7 * Data for 2002, ** Data for 2004 Source: Core team processing of Eurostat data, InTeReg processing of Eurostat data 2009

Table 5.6 ‐ Geography of structural change (NUTS3)

Gross domestic product per capita ∆ (%) Region Unit 1995 2000 2006 00/06 At221 Graz Eur PPP 28,000 31,400 36,800 17,2 At222 Liezen Eur PPP 18,100 20,000 24,900 24.5 At223 Östliche Obersteiermark Eur PPP 16,900 19,100 26,900 40.8 At224 Oststeiermark Eur PPP 14,300 16,900 19,900 17.8 At225 West‐ und Südsteiermark Eur PPP 14,000 16,200 20,400 25,9 At226 Westliche Obersteiermark Eur PPP 16,800 18,900 22,300 18.0

Unemployment rate (y15‐max)

Region Unit 2000 2006 ∆ (%)

At221 Graz % 3.0 4.1 36.7% At222 Liezen % n.a n.a ‐ At223 Östliche Obersteiermark % 3.4 n.a ‐ At224 Oststeiermark % 2.9 3.6 24.1% At225 West‐ und Südsteiermark % 3.2 4.3 34.4% At226 Westliche Obersteiermark % n.a n.a ‐ Source: InTeReg processing of Eurostat data 2009

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Table 5.7 ‐ Geography of structural change (NUTS3)

Employment by sector

Region Year Unit Agriculture Industry Services

1995 % 4.6 24.4 70.9 2000 % 3.6 23.2 73.3 At221 Graz 2006 % 3.0 20.6 76.4 ∆ 2000‐2006 (%) % ‐15.0 ‐11.0 4.2 1995 % 13.9 25.5 60.5 2000 % 11.5 26.0 62.3 At222 Liezen 2006 % 10.6 26.4 62.8 ∆ 2000‐2006 (%) % ‐7.5 1.5 0.1 1995 % 7.2 38.2 54.6 2000 % 5.9 37.4 56.7 At223 Östliche Obersteiermark 2006 % 5.7 35.4 59.0 ∆ 2000‐2006 (%) % ‐4.2 ‐5.5 4.1 1995 % 31.1 27.5 41.5 2000 % 25.9 28.1 45.9 At224 Oststeiermark 2006 % 23.0 27.2 49.8 ∆ 2000‐2006 (%) % ‐11.1 ‐3.2 8.4 1995 % 25.5 31.7 42.9 2000 % 20.1 31.5 48.6 At225 West‐ und Südsteiermark 2006 % 17.7 31.0 51.3 ∆ 2000‐2006 (%) % ‐11.8 ‐1.6 5.6 1995 % 14.6 32.0 53.2 2000 % 12.7 31.6 55.8 At226 Westliche Obersteiermark 2006 % 11.6 30.6 58.1 ∆ 2000‐2006 (%) % ‐8.7 ‐3.2 4.2 Source: InTeReg processing of Eurostat data 2009

63 Case Study – Styria (AT)

Table 5.8 ‐ Geography of structural change (NUTS3)

GVA by sector

Region Year Unit Agriculture Industry Services

1995 % 1.0 26.1 70.0 2000 % 0.9 29.7 71.2 At221 Graz 2006 % 0.7 30.3 69.0 ∆ 2000‐2006 (%) % ‐22.1 2.0 ‐3.1 1995 % 7.2 30.5 58.2 2000 % 5.6 33.8 60.1 At222 Liezen 2006 % 5.5 30.8 63.8 ∆ 2000‐2006 (%) % ‐2.3 ‐9.0 6.2 1995 % 3.4 45.7 46.1 2000 % 3.1 51.2 47.1 At223 Östliche Obersteiermark 2006 % 2.8 50.1 47.1 ∆ 2000‐2006 (%) % ‐8.8 ‐2.2 ‐0.1 1995 % 8.6 36.0 54.6 2000 % 5.9 39.0 56.7 At224 Oststeiermark 2006 % 4.7 35.1 60.1 ∆ 2000‐2006 (%) % ‐20.1 ‐9.9 6.0 1995 % 5.7 42.8 53.3 2000 % 4.5 43.1 56.2 At225 West‐ und Südsteiermark 2006 % 3.7 39.2 57.1 ∆ 2000‐2006 (%) % ‐18.4 ‐8.9 0.7 1995 % 5.6 40.3 58.0 2000 % 4.7 44.8 56.8 At226 Westliche Obersteiermark 2006 % 5.0 40.0 55.00 ∆ 2000‐2006 (%) % 7.4 ‐10.8 3.1 Source: InTeReg processing of Eurostat data 2009

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5.2 List of references

• Adametz, C., Fritz, O., Hartmann, C. (2000), Cluster in der Steiermark. Lieferverflechtungen, Kooperationsbeziehungen und Entwicklungsdynamik, Graz.

• Fabris, W., Hohl, N., Mazdra, M., Schick, M. (1996), Wirtschaftsleitbild Steiermark, IWI‐Studien Band XXVII, IWI, Wien.

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65 Case Study – Styria (AT)

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66 Work Package 4: “Structural Change and Globalisation”

5.3 List of persons interviewed

List of Policy makers

• Dr. Manfred Kink, Steirische Wirtschaftsförderungsgesellschaft mbH (SFG) • Ing. Gerd Holzschlag, Steirische Wirtschaftsförderungsgesellschaft mbH • Mag Carolina Schweda Amt der Steiermärkischen Landesregierung, Abt. 14, Wirtschaft und Arbeit • Mag Marina Trücher, Amt der Steiermärkischen Landesregierung, Abt. 3, Wissenschaft und Forschung • Mag Stefan Pech, Convelop ‐ cooperative knowledge design gmbh (Mid‐Term Evaluation for Objective 2 Programme Styria) • Mag. Dr. Gerd Gratzer, Amt der Steiermärkischen Landesregierung, Abt. 14, Wirtschaft und Arbeit • Mag. Erich Steiner,Steirische Wirtschaftsförderungsgesellschaft mbH (SFG) • Mag. Georg Brünner Amt der Steiermärkischen Landesregierung, Abt. 3, Wissenschaft und Forschung • Mag. Markus Gruber, Convelop ‐ cooperative knowledge design gmbh (Mid‐Term Evaluation for Objective 2 Programme Styria) • Manuela Roschitz Amt der Steiermärkischen Landesregierung, Abt. 14, Wirtschaft und Arbeit • Michael Kerschbaumer, Steirische Wirtschaftsförderungsgesellschaft mbH (SFG) • Wilhelm Kaufmann, Steirische Wirtschaftsförderungsgesellschaft mbH (SFG)

List of Benaficiaries

Measure 1.1 • Franz Bauer‐ Altesse Zigarettenhülsen‐ und Papierfabrik AG • Franziska Kollmann ‐ OTN Sinabelkirchen, Oberflächentechnik • Gerlinde Siml‐ ZF Lemförder Achssysteme Ges.m.b.H.

Measure 1.3 • Herbert Gartner ‐. SensorDynamics AG • Karl Jöbstl‐ AUGUSTA Metalltechnik GmbH • Michael Korb‐ Pentanova engineering GmbH

Measure 2.1 • Herr Dipl.‐Ing. Franz Kern W.E.I.Z.‐Weizer Energie‐Innovations‐Zentrum GmbH • Klaus Repnik‐ Innovations‐ und Technologiezentrum Fürstenfeld (ITZ)

Measure 2.2 • DI Christof Adametz‐ Technology Transfer Office of Graz University of Technology, (TECHNOFIT PRO) • DI Helmut Wiedenhofer‐ Joanneum Research Forschungsgesellschaft mbH (NANONET Styria) • Dr. Brigitte Kriszt‐ Zentrum für angewandte Technologie & Produktentwicklungszentrum

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