Scooters clustering efforts in Europe European Cluster Mapping Project “Identifi- cation, analysis, and monitoring of business clusters in Europe” Case study for the Commission of the Euro- pean Communities Enterprise and Industry Directorate-General* 17 January 2008 *The opinions expressed are those of the authors, the con- sultancy Competitiveness (www.competitiveness.com ), and do not represent the Commission's official position. Scooters clustering efforts in Europe Objectives of the case studies Table of contents 1. Objectives of the case studies ............................................. 4 Addressing the European innovation gap ...................................... 4 Understanding if clustering efforts are helping to close the gap..... 4 Why the Powered Two Wheeler (PTW) industry clustering efforts in Europe can be a useful example ................................................... 5 2. The clustering efforts in the PTW industry in Europe......... 6 The Powered Two Wheeler (PWT) industry................................... 6 The Powered Two Wheeler industry in Europe.............................. 7 Structure of the European PTW industry ....................................... 7 The European challenge ............................................................. 11 3. Have the clustering efforts been a driver for innovation in PTW cluster in Europe?............................................................... 17 Identifying the European bottle neck ........................................... 17 Initiative to restructure industry and business cooperation .......... 18 4. Successes and failures of the PTW clustering efforts in Europe .......................................................................................... 23 In defining the perimeter for the clustering effort ......................... 23 In setting the strategies to build a sustainable competitive advantage................................................................................... 23 In managing the clustering efforts jointly ..................................... 23 In applying the learning to the whole economy............................ 23 5. Learning from the PTW clustering efforts in Europe ........ 24 Implications for the local and regional support institutions........... 24 Implications for the national and EU institutions .......................... 24 18 January 2008 Europe Innova Cluster Mapping-Case Scooters Europe 2 Scooters clustering efforts in Europe Objectives of the case studies 6. Bibliography ........................................................................ 27 Table of figures Figure 1 PTW manufacture in Europe, 2001-2006 (ACEM) .............. 8 Figure 2 Geographical presentation of the PTW industry in Italy ...... 9 Figure 3 The needed supply chain restructuring............................. 13 Figure 4 Formulating supplier strategies ........................................ 20 18 January 2008 Europe Innova Cluster Mapping-Case Scooters Europe 3 Scooters clustering efforts in Europe Objectives of the case studies 1. Objectives of the case studies Under the 6th framework programme, the European Commission / DG Enterprise and Industry, has launched a range of projects related to clusters and innovation. One of them, under the Europe INNOVA programme, develops a comprehensive set of data and analysis around clusters, innovation, and related policies. In December 2006, the importance of these studies was reinforced by the Competitive- ness Council’s conclusions, which describe clustering as an area of priority where actions should take place in support of innovation. Addressing the European innovation gap There have been many other efforts to address the European innova- tion gap, and it is difficult to summarize the actions needed and pro- posed in one paragraph, but the report “Creating an innovative Europe” commissioned to former Prime Minister of Finland, Esko Aho, by the Hampton Court Summit, gives a clear message of the actions required and how clustering efforts could help close that gap. The report states in its summary: “Achieving an Innovative Europe requires a combination of a market for innovative goods and ser- vices, focussed resources, new financial structures and mobility of people, money and organisations. Together these constitute a para- digm shift going well beyond the narrow domain of R&D and innova- tion policy.”1 Understanding if clustering efforts are helping to close the gap The Aho report gives as well a perspective of how clustering efforts can help that paradigm shift: “Clusters and, more generally, regional agglomerations are often at the core of innovative development. It is widely recognised that new firms thrive in the proximity with other companies, investors, educational insti- tutions and research centres afforded by clusters particularly in the presence of world-class academic institutions. Mobility can be maxi- 1 http://ec.europa.eu/invest-in-research/action/2006_ahogroup_en.htm 18 January 2008 Europe Innova Cluster Mapping-Case Scooters Europe 4 Scooters clustering efforts in Europe Objectives of the case studies mised when there is a local labour market that allows regular flows of people from one situation to another, with accompanying diffusion of knowledge. As well as the greater opportunity range it is clear that barri- ers such as the need to move house or schooling for families are re- moved. However, it also emphasizes that minimising such barriers more generally will create a more functional society. It is important to ensure that clusters are defined in terms of the new market and knowledge relationships needed for emerging sectors to thrive. It is even counter-productive to reinforce traditional sectoral clusters as these may inhibit the necessary mobility. Firms in traditional sectors are far more likely to find innovative growth by forming new linkages and apply- ing new technology to their existing products and services. This can be facilitated by opening the clusters to cooperation with and learn- ing from other clusters in the same or other sectors.”2 Why the Powered Two Wheeler (PTW) industry cluster- ing efforts in Europe can be a useful example 2 http://ec.europa.eu/invest-in-research/action/2006_ahogroup_en.htm 18 January 2008 Europe Innova Cluster Mapping-Case Scooters Europe 5 Scooters clustering efforts in Europe The clustering efforts in the PTW industry in Europe 2. The clustering efforts in the PTW industry in Europe The Powered Two Wheeler (PWT) industry Powered two wheelers are getting more popular worldwide playing increasingly important role in the development of a fully sustainable integrated transportation system. This category of vehicles includes motorcycles, scooters, mopeds and cyclemotors. Globally the market for powered two wheelers is divided into two ma- jor regions. The first one comprises US, Japan and Western Europe, where consumers mainly see the PWT vehicles as a pleasant way of transportation and already having one or more automobiles more expensive and powerful machines. The other region includes Asia/Pacific, Latin America and Africa/Mideast where PWT vehicles are the only means of transport for families and work purposes. These machines are cheaper and less powerful. The world demand3 for PTW was estimated at 14 million vehicles per year in 1995. Since then, the market has been growing rapidly and is predicted to reach 55.7 million units in 20114 with annual rise of 5.4%. The increase will result from the growing demand both in de- veloped and emerging markets. There will be sustainable demand for all categories of motorcycles, however China, one of the largest PTW markets, will move away from PTW vehicles toward automobiles. To compensate the decrease in demand developed markets will favour PTW production due to the rising fuel prices and restrictions on car use. 3 The EU accounted for 12%, i.e. 1.7 million vehicles of the world demand. 70% of PTW found a customer in Asia (Japan excluded). China alone accounted for 30% of worldwide sales as although only 3 out of 1000 inhabitants would own a PTW, even at such a low density the huge population size creates the world's largest PTW market. 4 Source: Fredonia Group Inc., report October 1, 2007 18 January 2008 Europe Innova Cluster Mapping-Case Scooters Europe 6 Scooters clustering efforts in Europe The clustering efforts in the PTW industry in Europe The Powered Two Wheeler industry in Europe The future trend in the demand for the PTW vehicles in Europe is clearly seen now. Scooters, mopeds and motorcycles are affordable and simple transport, easily accessible by drivers of all ages. Traffic congestion, increasing price for gasoline, parking problems, ecologic issues, and restrictions to engines no bigger than 50cc and speeds up to 45 km/h encourage the use of PTW vehicles. If in 1998 the European5 PTW Park consisted of 25.7 million vehicles then in 2004, the figure went up to 29 million unites. Europe was a leading production centre of PTW vehicles in the past. Peugeot (France), Triumph (UK) and BMW (Germany) have always been famous trademarks among powered two wheeler machines. Europe launched Piaggio Vespa (Italy), a “global cultural icon” of the PTW industry and continues offering new motorcycle marques such as Aprilia (Italy), Derbi (Spain), Ducati (Italy) and KTM (Austria). The share of European products is very small outside their birthplace counting to 2.6% of the US PTW market and to 0.5% of the Japa- nese market. In European countries EU producers occupy leading positions