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SPEECHES

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Speech by the President of the Republic at the Closure of the IX COTEC Europa Meeting
Champalimaud Foundation, Lisbon, 12 February 2014

Please allow me to begin by thanking the President of the Champalimaud Foundation for having made this space available, an inspiring area of knowledge and science, for the work of the IX COTEC Europa Meeting, this year dedicated to the topic of industrialization.

And it is with deep and friendly feelings that I greet the presence, that greatly honours us, of His Majesty the King of Spain, D. Juan Carlos, and of the President of the Republic of Italy, Signor Giorgio Napolitano.

I also want to express my appreciation to Commissioner Antonio Tajani, who brought us a greatly interesting perspective on the recent proposals from the European Commission concerning European reindustrialization.

I equally address my greetings to the Minister for Economy, who led the joint ministerial meetings covering the common channels for the industrial policy of our countries.

Ladies and Gentlemen,

For many years there was a predominant idea that an advanced economy could dispense with a strong industrial and competitive basis. It was stated that Europe would invent the technology with which the remainder of the world would produce the goods.

In the face of the market globalization, which anyway did not dispense with services, the deindustrialization of our economies was extended by the difficulty Europe went through in responding to its internal challenges and in broaching the necessary reforms.

In this context, the international industrial groups eyed Europe as a less attractive destination for their investments.

This decline in attractiveness of the European industrial sector and the 2008 financial crisis intensified the risks of demolishing a fair portion of the productive fabric, especially notorious in sectors with weaker industrial bases and guided towards production with low added value.

The fact is that industry is an essential basis for technological innovation and, additionally, a main buttress for exports. Compared with other sectors, industry has greater employment stability and generates a higher average productivity.

Some will tend to confute the idea of European reindustrialization with an obsolete and nostalgic view of large heavy industries, with low added value, with an intensive use of energy and natural resources, with a precarious or very harmful relationship with the environment and with people’s quality of life. This is the image of the industry of the past, the which we do not want to return.

The industry of the future must, on the contrary, be a production activity capable to harmonize the economic, environmental and social dimensions of sustainable development. Industrial production must be based upon a more efficient use of energy and natural resources, with greater respect for the safety and quality of products and their relation with the environment.

The increasing trend of production costs in the emergent economies and the intensive adoption of automation are creating opportunities for the relocation of industrial activity in the better developed and structured economies.

Ladies and Gentlemen,

In spite of the good conduct of exports in latter years, and of all the reforms carried out, the levels of industrial production in Southern European countries continue lower than in 2008, contrary to those of countries that have almost totally recovered pre crisis levels.

The decreases in unit work costs have impelled company competitiveness. But these gains may only be meaningfully sustained through the improvement in human capital and by adoption of innovative processes.

Companies which emerged stronger from the crisis were able to rationalize costs and recover profitability levels. Their success is based on continued investment in innovation, in close cooperation with customers and suppliers, in specialization in sector niches with better performances, and lastly, with expansion through geographic diversification.

The heightening in the competitiveness of our companies cannot just depend upon the adjustment of the labour costs. Companies with greater success are those that, visibly, invest more in Research & Development and in the training of their human capital.

The industrial fabric of our countries is characterized, as we are well aware, by the small dimension of companies, which diminishes, even more, the already scarce capacity for investment and incorporation of knowledge and technology.

The existence of policies of technological transfer that power the growth of our companies represents, for this reason, an essential factor to heighten specialization and increase productivity.

In accordance with the report presented in the last COTEC Europa meeting, in Madrid, the differences in productivity between the micro sized and the larger processing companies can vary between two and four times.

The need for macroeconomic stabilization and budgetary consolidation has heavily sacrificed our countries in many ways. In the issue of innovative performance, the convergence that existed some ten years ago, in line with data from the European Commission, was interrupted for the first time in 2012.

The weakening of the policies of Research & Development must be avoided, since this would mean, in the medium term, the reduction in the efficiency of innovation systems and enlarge the gap that separates us from the more competitive countries in the European Union.

Lower investment in innovation would lead to the worsening of the technological deficit of the companies in the Southern economies, which at the moment is approximately 20% les than that of the average in the European Union.

If it is our ambition to be innovatory nations and if we want to compete with countries that have been intensifying their stake in technological areas with high growth power, we cannot continue reducing investment in the production of knowledge and technological development.

Our productive structure will have to benefit from the transfer of a higher level of knowledge and of technology, either through a greater interaction with national innovatory agents, or through a greater participation in the innovation networks of the European area.

A large number of our economically viable companies, with special reference to SMEs, have been facing excessive financial costs.

The fact that exporting companies, in particular, support interest charges which are much greater than their European counterparts seriously harms their competitiveness, affects investment decisions and inhibits penetration into new markets.

Considering the fragmentation that is happening in the European financial market, it is urgent that, at the level of the European Union, new non banking sources of financing come into operation.

In the new European financial framework, community funds must grasp industrial re-launching, with a decisive stake on new industries and on creative industries. European reindustrialization policies must take into consideration the specific needs of the several Member States, attending, for instance, to the weight that SMEs have in certain economies.

Reindustrialization thus has to be harmoniously and coherently materialized in all of Europe, at the service of the deepening of integration and cohesion.

As a complement, in the matter of energy policy, the demand is for a new energetic policy, more competitive and more efficient.

The pillars of this model must not forget, however, the objectives and strategies of public investment, already consecrated by several Member States, in the systems of energetic production based on renewable energies.

The reindustrialization effort must be accompanied, finally, by a more effective and demanding common European trade policy. Should this not come to fruition it shall be very difficult to find visible effects in the growth of the economy and in the creation of employment.

The Union must defend its interests, in the strictest and most integrated form, whether within the frame of the World Trade Organization, or through cooperation partnerships with other world regions. It is essential that free trade is also fair trade. Should world trade not be loyal, it shall never be truly free.

The European Union continues to suffer the effects of distortion of competition at world level, such as dumping, State aids, differing rules and demands in social and environmental issues. And, if the effects of these distortions are projected in the commercial capacity of the Union as a whole, the real result is that they affect certain economies with particular significance.

Ladies and Gentlemen,

The new initiative of the European Commission for a new industrial strategy, comprised in the 2020 Horizon Strategy, is an opportunity to invert the dissymmetry in the competitiveness of our economies and to provide a new incentive to investment and to the creation of qualified and more stable employment.

It is a Programme guided towards companies in area of great relevance – processing industry, transport, health and well being, for instance -, which may provide a new impulse to cooperation between universities and the industrial fabric and generate greater involvement and proximity of young researchers to issues of industrial interest.

It is thus important to achieve a strong mustering with the universities, centres of technology, entrepreneurial and sector associations, in order to set up dynamism in organization and cooperation that allows obtaining the maximum advantage of this new opportunity of technological transfer and modernization of our industry.

The 2020 Horizon Strategy will, anyway, be a good opportunity to strengthen the bonds of cooperation between company and university networks in our three countries. The COTEC organizations can have in this instance, I believe, a very influential role.

To continue to invest in scientific and technological knowledge and in its disclosure to the economy must be a priority.

To reinforce the technological content and the culture of innovation in our productive fabrics, which still have worrying weaknesses, continues being a strategic objective common to Spain, Italy and Portugal.

I am certain that the reflections emerging from this Meeting on the challenges of the European reindustrialization will provide a relevant contribution for the defining of a new industrial policy in the Union.

I am grateful for your participation. I know that all those here share the same ambition of a better future for the European Union and for the peoples that comprise it.

Thank you very much.

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